AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIES IN LESS DEVELOPED AREAS OF THE FREE WORLD 1965

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B01090R000400010024-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 36
• Document Creation Date: December 19, 2016
• Document Release Date: January 25, 2006
• Sequence Number: 24
• Publication Date: March 1, 1966
• Content Type: REPORT

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AID AND TRAD',- CTIV TIES OF Chi 11
COUNTRIES I I. ESS DEVELOPED It
OF 'NE FREE WORLD
1965
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This series provides periodic summaries and analytical interprEta.-
tions of significant developments in the economic and military relbtiors
of Communist countries with less developed countries of the Free Wcrld.
These developments are reported on a current, factual basis in the
biweekly reports under the same title.
This report, covering the 12 months from 1 January through 31
December 1965, constitutes the twentieth periodic supplement to a. report
on Sino-Soviet Bloc Postwar Economic Activities in Underdeveloped_frea.w,
8 August 1956, SECRET. The present supplement updates the previous
semiannual report and includes the more significant developments dt.rinF
the reporting period. It also relates noteworthy noneconomic activi-
ties, including military aid, to economic operations of the Communist
countries in less developed areas. Data have been revised to include
new information, and figures in the current supplement supersede trose
in previous issues.
In this report the term Communist countries refers primarily tc the
following countries that extend aid to less developed countries of the
Free World: the USSR, Communist China, and the following countrieE of
Eastern Europe -- Bulgaria, Czechoslovakia., East Germany, Hungary,
Poland, and Rumania.. For certain limited purposes the term also me,y
include Albania., Cuba, Mongolia, North Korea, and North Vietnam, none
of which is normally a. donor of aid. Yugoslavia is not included.
The term less develo ed countries of the Free World includes tie
following: (1 all countries of Africa except the Republic of South
Africa; (2) all countries in Asia except Japan; (3) Iceland, PortuFa.l,
and Spain; (4) all countries in Latin America except Cuba.; and (5)
all countries in the Middle East, including Cyprus, Greece, Syria,
Turkey, and the United Arab Republic.
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CONTENTS
PaV
I. Communist Activities in Less Developed Areas,
by Type of Activity . . . . . . . . . . . . . . . . . . 9
A. Introduction . . . . . . . . . . . . . . . . . . . .
B. Economic Assistance . . . . . . . . . . . . . . . . . 11
a. Extensions . . . . . . . . . . . . . . . . . 11
b. Distribution by Sector . . . . . . . . . . . 13
c. Drawings and Repayments . . . . . . . . . . 13
2. Technical Assistance . . . . . . . . . . . . . . 14
a. Economic Technicians . . . . . . . . . . . . 14
b. Academic Students and Technical Trainees . . 15
C. Military Assistance . . . . . . . . . . . . . . . . . lb
1. Credits and Grants . . . . . . . . . . . . . . . lb
2. Technical Assistance . . . . . . . . . . . . . . lb
a. Military Technicians . . . . . . . . . . . . lb
b. Military Trainees from Less Developed
Countries . . . . . . . . . . . . . . . . . lb
1. Value . . . . . . . . . . . . . . . . . . . . .
2. Direction . . . . . . . . . . . . . . . . .
3. Commodity Composition, 1964 . . . . . . . . . .
1(
21
22
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AID AND TRADE ACTIVITIES OF COMMUNIST
COUNTRIES IN LESS DEVELOPED AREAS
OF THE FREE WORLD, 1965
Summary
Introduction
The sizable new extensions* of economic aid by the USSR to les
developed countries during 1965 and the continuing high level of
deliveries of military equipment to these countries indicate the
willingness of the new Soviet leadership to extend new economic aic
where favorable opportunities exist and to fulfill its existing corunit-
ments. They also demonstrate that Moscow's current appraisal, of tte
aid program and its prospects in less developed countries differs
little from that of the previous regime (see Figure 1).
It is apparent, however, that the new leadership has adopted a
more deliberate approach in undertaking new economic aid commitments.
Unlike the earlier practice of announcing large umbrella credits
before specific projects were negotiated, the USSR in 1965 apparently
preferred to avoid definitive commitments pending detailed studies
and negotiations. Moreover, the financial details of recent Soviet.
aid agreements have not been publicly announced in the USSR. This
restraint may be an effort to allay internal criticism of the program
while domestic shortages still persist. It may also reflect the
uncertainty surrounding critical decisions over Soviet allocation cf
domestic resources still to be made for the upcoming long-term eco-
nomic plan. The change in Soviet leadership has had no discernible
adverse effect on military aid policy: new aid agreements to supply
military equipment to nine less developed countries were signed during
the year and the USSR continued to honor existing agreements.
* In this report the term extension refers to a commitment to provide.
either as a grant or on deferred payment terms, goods and services not
available in the recipient country. Assistance is considered. to have
been extended when accords are initialed and constitute a formal
declaration of intent. The term obligation refers to a credit or grant
when it has been allocated to specific end uses. The term drawings
refers to the delivery of goods or the use of services.
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Th, year 1965 was one or serious problems and frustrations for
Peiping's policy toward less developed countries. The Indonesian
Army's suppression of the pro-Peiping Indonesian Communist Party during
the last three months of the year was perhaps the most serious setback
to Peiping's expectations. Chinese Communist failure in Algiers to
marshal Afro-Asian support and Cuba's recent shift to more explicit
support of many Soviet policy positions also appeared to have somewhat
blunted 'Peiping's drive to expand its influence in the less developed
world.
East European countries, on the other hand, expanded their aid
programs in 1965 and continued to apply the more liberal aid policies
that became apparent in their new aid undertakings during 1964. All
major new aid extended during 1965 carried easier terms than in the
past, and a more liberal attitude was applied to the repayment problems
of a number of aid recipients. These developments, together with a
record level of East European aid extended in 1965, demonstrate the
determination of these countries to exploit the aid program as a means
of strengthening further their economic and political ties with the
less developed countries.
Economic Credits and Grants
Following peak annual extensions of almost $1.7 billion in 1964,
Communist countries extended a total of $1.2 billion of aid to 22 less
developed countries during 1965, increasing their aggregate aid com-
mitments since the inception of the aid program in 1954 to more than
$7.7 billion. As in 1964, the major share of new economic assistance
was allocated to Middle Eastern countries, with Iran the largest
single aid recipient and the UAR second. East European countries
extended a record $491 million of new aid during 1965. The USSR
extended $656 million, more than 80 percent of which was designated
for CENTT0 countries. Communist China was the smallest aid donor
during the year, extending only $62 million in economic credits, com-
pared with its record commitments of $338 million in 1964. New
economic aid continued as in the past to be most heavily committed
to the industrial sector of the economies of less developed countries,
while an increasing allocation of aid to commodity imports reflected
a growing Communist awareness of the need to generate local currency
to implement the aid program more effectively.
Drawings on Communist aid in 1965 are estimated to have totaled
about $4.55 million (a decline of about 15 percent from the 1964 level),
bringing total Communist deliveries since 1954 up to $2.6 billion at
the end of 1965. Concurrent with the rise in. aggregate drawings, the
net indebtedness of the less developed countries for economic aid. to
the USSR and to the countries of Eastern Europe increased to about
$2 billion by the end of 1965. In 1965 the less developed countries
were scheduled to repay an estimated total of $115 million for principal
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SECRET
ECONOMIC AND MILITARY AID ACTIVITIES OF COMMUNIST COL I ]FRIES
IN LESS DEVELOPED COUNTRIES OF THE FREE WORLLI`
Selected Years, 1954-65
ECONOMIC AID EXTENDED
Communist China
USSR
= Communist China
01 Eastern Europe
Il USSR AA;ii. ,- t IC r)-il .
ECONOMIC AND MILITARY
TECHNICIANS
M Military
fl Economic
" [ - ] I I I I I II II I_ .ILL 1-1__J
1956 1957 1958 1959 1960 1961 1962 1963 1964 1965
STUDENTS DEPARTING FROM =LESS DEVELOP':I
COUNTRIES FOR TRAINING IN COMMUNIS
COUNTRIES
Military
IE Technical
? Academic
Data are revised periodically to include oat a *c,Ymatian aia the r
may not be comparable with data prrviour Ge cento7
SECRET
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and interest on Soviet credits and approximately $45 million on creditE
from East European countries. As in 1964, there was evidence that
a number of aid recipients were unable to meet these heavy repayment
obligations, and concessions were made in some cases to allow deferment
of current debt service payments. In addition, softer terms on nev
credit extensions were requested, and new assistance, especially b~ th?
countries of Eastern Europe, generally allowed longer repayment periodE.
Even if future aid program deliveries were to remain at current le%els,
annual debt repayments on credit extensions would increase at a rate
of between 25 and 30 percent a year and thus will be a growing protlem.
The technical assistance program continued apace with almost lt,00C
Communist economic technicians employed in less developed countries
during 1965, an increase of 30 percent over the previous year. A Shari
expansion in the number of Chinese Communist technical personnel accourtz
for most of the increase and reflected the accelerated pace of Chirese
project activity in Guinea, Mali, and Yemen as well as the labor-irtensi
character of Chinese aid activities. Approximately two-thirds of all
Communist technical personnel in the less developed countries were
employed in Afghanistan, Algeria, Guinea, India, Mali, Nepal, and the
United Arab Republic (UAR). In the UAR alone there were nearly 2,500
Soviet technicians, 1,500 of whom were engaged in construction of the
main dam and the electric power grid system eventually to be fed b~ the
Aswari High Dam. About 2,100 Chinese were employed in Guinea and M%.li
developing agricultural areas and small-scale industrial facilities.
Technical Trainees and Academic Students
As part of the program to increase the technical proficiency o1
personnel in less developed countries, about 1,400 persons from these
countries went to Communist countries during 1965 to receive technical
training. This brought the total number of persons who have undertaker
this training since 1956 to almost 11,000. These trainees have included
professional and managerial personnel and skilled technicians whose
training is related primarily to the manpower requirements for Communist
aided projects in their homeland.
During 1965, 1,690 students from less developed countries enro:iled
in academic training programs in Communist countries. This number
represents a drop of approximately 39 percent from the preceding year,
which is also the third consecutive year in which a decline has occurred
Continuing the pattern of the past, by far the largest percentage rf
new enrollees went to the USSR and, as in recent years, most of the nee
students were from African countries.
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Military Credits and Grants
Communist countries extended almost $200 million of military aid
to less developed countries during 1965, bringing the total of such
assistance extended since 1955 up to $4.3 billion. The USSR, which
has provided more than 85 percent of total Communist military aid to
less developed countries since the beginning of the program, continued
to be the chief supplier in 1965. Although new aid commitments in 1965
were considerably below the near-record level of 1964, the USSR and
Czechoslovakia each concluded important new agreements with India; in
addition, the USSR concluded agreements with Algeria, Congo (Brazzaville),
Indonesia, Uganda, and Yemen. A minor credit was extended by Communist
China to Cambodia.
Military Techincians and Training
AE materiel deliveries under old agreements continued at a high
level in 1965, the number of military technicians sent to assist in
the assembly of equipment and to instruct in its use rose to 3,870,
an increase of 17 percent over 1964. Afghanistan, Algeria, and India
accounted for the largest part of the increase although most of the
other military aid recipients also employed more technicians in 1965
than they had in the previous year. During 1965, 2,720 nationals from
15 less developed countries enrolled in military training programs in
Communist countries, primarily in the USSR. Since the start of the
program, nearly 21,000 persons have received such training, and 4,355
still were being trained at the end of 1965. Indonesia has accounted
for more than 40 percent of the total number trained, and five other
countries -- Afghanistan, Algeria, Iraq, Syria, and the UAR -- have
accounted for another 45 percent.
Trade
At. the meetings of the United Nations Conference on Trade and
Development in 1965, the Communist countries continued to avoid precise
commitments to the less developed countries on grounds that the responsi-
bility for the present economic plight of these countries rests with
the "imperialists." In place of substantive undertakings, the Commu-
nist countries reiterated many of the same themes that they had pre-
sented at the Geneva Conference in 1964. In general, the less developed
countries remained unimpressed by these Communist propaganda claims,
realizing that the Communist area cannot match the developed countries
of the Free World in fulfilling their trade and development needs.
Foreign trade turnover between the Communist and less developed
countries during the first half of 1965 amounted to $1.9 billion, or
roughly 15 percent above the corresponding period of 1964. This
expansion was accounted for primarily by increased Soviet and East
European trade with the less developed countries. In 1964, total
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Communist trade with these countries increased 12 percent over 196= to
$3.6 billion. The growth during 1964 was accounted for by increased
East European and Chinese Communist trade. Soviet trade with the ]ess
developed countries in 1964 remained at the 1963 level of $1.4 billion,
primarily because of a decline in Soviet imports of rubber and cotton
and a leveling off of Soviet exports under long-term economic cred:ts.
The geographic distribution of Communist trade with the less developed
countries during the first half of 1965 followed the pattern of 19f4,
concentrating on Asia and the Middle East in general and on India End
the UAR in particular. In 1964 the commodity composition of trade
between Communist and less developed countries showed some variations
from earlier years. The share of food products in total Communist
imports rose from 27 to 39 percent of the total, while crude materials
declined from 60 to 45 percent. In the case of Communist exports, the
most striking feature was the rise in the importance of machinery and
equipment, which now accounts for two-fifths of total Communist exhort=
to less developed countries, compared with one-third in 1963.
Communist relations with African countries during 1965 were high-
lighted by a low level of new economic aid commitments; by some sharp
setbacks for Communist, particularly Chinese, policies in Africa; End
by a general decline in overt Sino-Soviet competition for influence in
African countries. Only $98 million in new aid was extended during the
year, a precipitous drop from the peak annual level of.$348 millior in
1964. The USSR did not conclude any major agreements in 1965, compered
with $215 million extended to African countries during the previous year
The overthrow of Ben Bella in Algeria and the assumption of power
by the Boumedienne regime ended the use of that country as a forum for
Communist, especially Soviet, propaganda. The Afro-Asian (Bandung II)
Conference, avidly sought by Communist China as an instrument for
expanding its influence among participating countries, was canceled.
In spite of these policy reversals, however, Communist aid activities,
particularly military, continued, and a Boumedienne visit to Moscow
in December served to assure the continuance of Soviet programs-, in
Algeria.
No new Communist aid commitments were made to Congo (Brazzaville),
but some progress was noted under existing Soviet and Chinese credits.
The favorable Chinese position in the Central African Republic (CAB)
came to an abrupt end with the overthrow of the Dacko government and
CAR's severance of diplomatic relations with Communist China. Morocco
was the recipient of the largest Communist credit extended to an African
country in 1965, $30 million from Poland. Nigeria received its first
economic aid credit from a Communist country with the acceptance of a
$14 million credit from Czechoslovakia.
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Ghana was the recipient of a $20 million credit from East Germany
and President Nkrumah announced his decision to initiate discussions with
the USSR for the construction of a $100 million hydroelectric dam at Bui.
Guinean President Toure visited the USSR and Hungary and claimed that he
had received Soviet assurances of assistance for construction of the
Konkoure dam and related aluminum facilities. About 770 Chinese tech-
nicians were employed in Guinea, mainly at the site of the Kinkon dam
and at the Macenta textile project. Mali also was host to a large
number of Chinese technical personnel, about 1,230 employed largely on
agricultural and light industrial projects. In Tanzania, Communist aid
programs were characterized by Chinese cash disbursements, a modest
amount of East German construction activity, and deliveries of Soviet
military equipment.
Major Communist aid activities in Asian countries during 1965 gener-
ally followed the pattern of recent years. Construction activities in
Afghanistan and India continued at a high level, while the programs in
Ceylon and Indonesia reflected the usual confusion and lack of satis-
factory progress. Military aid, however, continued to be delivered
rapidly, concentrated in Afghanistan, India, and Indonesia.
Although Soviet construction projects in Afghanistan progressed
satisfactorily, the USSR also initiated action to ease some of Afhani-
stan's financial problems. Commodity credits were extended to generate
local currency for Soviet projects, and the services of a number of
Soviet technicians were provided without charge. Soviet military aid
activities also continued at a high level. In March, Afghanistan
accepted its first aid from Communist China, a $28 million interest-free
credit.
li Burma, Chinese construction activity continued to increase, and
the Kunlong bridge was opened to traffic in November. There was little
significant economic aid activity in Cambodia. Communist China agreed
to provide military equipment sufficient to equip about 10,000 Cambodian
military personnel. A change in government in Ceylon early in 1965
brought a shift in that country's foreign policy and an effort to im-
prove relations with the West. Prior to the election, East Germany had
extended a $42 million credit to Ceylon.
India continued to search for substantial amounts of foreign eco-
nomic assistance during 1965 for its Fourth Five Year Plan, and two
.high-level delegations traveled to Moscow to obtain Soviet..aid. Prime
Minister Shastri's visit in May formalized the Bokaro steel mill agree-
ment. In November, Finance Minister Krishnamachari reportedly sought
as much as $1.5 billion from the USSR for India's development program.
No specific Soviet commitments, however, have been made public. Soviet
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military aid to India picked up in tempo after September with the sign-
ing of a $100 million agreement with the USSR for naval equipment. Thf
USSR delivered at least 6 -- and perhaps an additional 10 -- MIG-2 jet
fighters to India.
The abortive "coup" in Indonesia in September highlighted. that coun-
try's relations with the Communists. Relations with Communist Chi-,.a
deteriorated rapidly as Indonesian military leaders became convinc,d
that the Chinese were implicated. All trade with China was embargf.)ed
and Chinese economic technicians withdrawn. Indonesian-Soviet relation?
however, remained relatively unchanged. Military deliveries contiii.ued,
and a new agreement totaling $26 million was signed in May.
Soviet and Chinese aid activities in Nepal continued to focus ()n
roadbuilding projects. Pakistan further expanded its relations wi-,h the
Communist countries, especially Communist China, during 1965. A $>0 mil.
lion Chinese credit was formally signed in February, and half the .ota
was allocated for industrial installations. Soviet aid to Pakistan
totaled $50 million, largely for the import of machinery and equipment.
Latin American economic relations with Communist countries wer,
confined largely to trade. Large grain sales by Argentina to Comutnis7.
China and the USSR, totaling at least $245 million, highlighted su-h
trade. In September the USSR extended a $15 million credit to the
Argentine oil industry. Brazil's foreign economic policies reflected
a cautious interest in expanding trade with the Communist countriel-;.
An agreement was concluded between the USSR and a private Brazilian
firm for an unspecified credit to construct a pilot plant for proc,.s-
sing shale oil. During the year, Communist China purchased 11,500 tone}
of copper and 40,000 tons of sodium nitrate from Chile, paying for
these purchases in hard currency.
Communist aid activities in the Middle East were highlighted br
major commitments to Iran and Turkey, an $84 million credit to a Greek
shipowner, and additional sizable aid commitments for the UAR's Se~'ond
Five Year Plan (July 1965 - June 1970). In Cyprus the USSR ecmple~,ed
its military aid deliveries under the September 1964 agreement (trans-
shipped through the UAR, where some SAM equipment still was it storage
and a number of Communist countries concluded trade protocols designed
to absorb much of Cypriot agricultural surpluses. Trade between Greece
and the Communist countries remained at a high level. The USSR ex??endec`
* Tonnages are given in metric tons throughout this report.
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an $84 million credit to a private firm for the purchase of Soviet ships
with payment to be made over a period of eight. years in hard currency
and Greek commodities.
The USSR achieved a significant economic breakthrough in Iran with
the negotiation of a $290 million credit for the construction of a steel
mill, a machine tool plant, and a natural gas pipeline. The credit will
be repaid over 12 years at 2.5 percent interest in Iranian commodities
and natural gas. The pipeline will be built to carry gas to the Soviet
border, but the USSR apparently will not supply the large-diameter pipe
required for the line. Iran also accepted credits from Czechoslovakia
and Hungary totaling $25 million.
No new Communist credits were extended to Iraq, but the USSR agreed
to obligate part of its 1959 credit for the construction of a dam on
the Euphrates River and a tractor assembly plant. Syria was the recipient
of credits from East Germany totaling $29.7 million. A defunct Polish
credit of $15 million was revived and raised to $25 million. The Soviet
Union may have negotiated a new military agreement with Yemen in mid-
summer.
Turkey showed a willingness to expand economic relations with the
USSR. During an August visit to Moscow, Prime Minister Urguplu accepted
a Soviet commitment to construct a number of plants in Turkey under a
credit unofficially placed at $200 million. Although a new government
emerged in October, Soviet surveys subsequently were initiated to
determine the precise cost of seven projects which may be undertaken.
In December an agreement was announced by Turkey, resulting from an
official exchange of letters.
During 1965 an additional $255 million was extended by Communist
countries to the UAR, bringing to almost $900 million the total of
Communist aid commitments made during the past two years for the UAR's
Second Five Year Plan. Economic difficulties in the UAR, however,
compelled the regime to initiate a review of the development program,
resulting in the cancellation of a number of Soviet, Czechoslovak,
Polish, and Rumanian projects. A new military aid agreement with the
USSR may have been signed during the year.
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I. Communist Activities in Less Developed Areas, by Type of_Activrty
A. Introduction
In the weeks following Khrushchev's ouster from power, concern
was evident among many of the leaders of new states that his successor.-
might view differently the Soviet foreign aid program in the less c.e-
veloped world. In fact, however, the foreign aid policy of the neti.-
regime suggests an appraisal of its prospects in less developed cocn-
tries which differs little from that of its predecessor. The willeng-
ness of the new Soviet :Leadership to extend new economic aid where
favorable opportunities exist reveals that Moscow believes that sociali?
revolutions in such countries are unlikely in the near term. ~'hus the
USSR has little alternative to supporting existing regimes, and their
economic development programs, if it hopes to make any progress toward
accomplishment of its objectives in the less developed world.
Although the $656 million in new economic aid extended by the
USSR in 1965 was almost two-thirds the record level of economic aic
it extended in 1964, Moscow concentrated its efforts on wooing the
Central Treaty Organization (CENTO) countries of Iran, Pakistan, and
Turkey with substantial offers of economic aid. Taking advantage cf
the growing receptivity of these countries to Soviet aid blandishmEnts,
the USSR signed aid agreements with the three CENTO members totaling
approximately $540 million, or more than four-fifths of all economic
aid extended to less developed countries by the USSR during the ye?,r.
Moscow has, however, adopted a more deliberate approach in
undertaking new economic aid commitments. Unlike its earlier praciice
of announcing sizable credit extensions prior to negotiations on sxeci i
projects, the USSR in 1965 apparently preferred to avoid definitiv? aic
commitments pending detailed studies and negotiations. Definite Scviet
commitments to Iran and Turkey and to India's Fourth Five Year Plar
(1966-70) presumably were made contingent on the results of extensive
and protracted surveys. Moreover, none of the financial details of
recent Soviet aid agreements is.known to have been publicly announced
domestically. This restraint may be an effort to allay internal criti-
cism of the program while domestic shortages still persist in the LSSR.
In larger part, it may reflect the uncertainty surrounding critical
decisions over the Soviet allocation of domestic resources still tc be
made for the upcoming long-term economic plan.
The change in Soviet leadership also has had little discerriblE
effect on the military aid policy of the USSR. Although the close
relationship enjoyed with the Ben Bella regime has not been established
with the successor government, the USSR has become less restrained in
its attitude toward the new Boumedienne regime and has continued tc
honor existing military aid agreements. The current Soviet leadership
concluded new military aid agreements with nine less developed cour.triEs.
and earlier agreements were implemented rapidly.
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The year 1965 was one of serious problems and frustrations
for Peiping's policy toward less developed countries, and Communist
China extended only $62 million in economic credits to these countries
in 1965, compared with the record $338 million in 1964. The Indonesian
Army's suppression of the pro-Peiping Indonesian Communist Party during
the last three months of the year was perhaps the most serious setback
to Peiping's expectations. The Chinese Communist failure in Algiers
to marshal the Afro-Asian support for Peiping's policies and the recent
shift by Cuba to more explicit support of many Soviet policy positions
also appeared to have somewhat blunted Peiping's drive to expand its
influence in the less developed world.*
East European countries in 1965 continued to apply the more
liberal aid policies that became apparent in their new aid undertakings
during 1964. All major new aid extended during 1965 carried easier
terms with longer amortization periods than the 5 to 8 years that usu-
ally have been applied to these credits. Moreover, a more liberal atti-
tude was applied to the repayment problems of a number of aid recipients
by East European creditors. These developments, together with a record
:level of East European aid extended. in 1965, demonstrate the determina-
tion of these countries to exploit the aid program as a means of strength-
ening further their economic and political ties with the less developed
countries.
fn. 1965 the meetings of the United Nations. Conference on Trade
and Development (UNCTAD) offered a forum for examination of Communist
policy on trade with the less developed world. Communist countries
were careful to avoid any precise commitments to the less developed
countries on grounds that the responsibility for the present economic
plight of these countries rests with the "imperialists." In place of
the substantive undertaking proposed for them by other conference mem-
bers, the Communist countries reiterated many of the same themes that
they had, presented at the Geneva Conference in 1964. Among these were
the recurrent espousal. of the need for a truly universal trade organiza-
tion and a relaxation of East-West trade controls which, they alleged,
hamper further improvement in Communist trade with the less developed
countries. The USSR also repeatedly stressed. the fact that as of
1 January 1965 it had fulfilled a promise made at the Conference by
abolishing tariffs on all goods imported from less developed countries --
an action with little practical meaning since tariffs do not significantly
affect the planned imports of the Soviet foreign trade monopoly. In
general, the less developed countries remained unimpressed by these Com-
munist generalities and propaganda claims, realizing that the Communist
area cannot match the developed countries of the Free World in fulfill-
ing their trade and development needs. The developing countries also
continued to press the Communist countries for more liberal terms on
aid and trade and for improved performance in. carrying out bilateral
trade agreements.
Early in January 1966 the Central African Republic and Dahomey severed
diplomatic relations with Communist China.
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B. Economic Assistance
1. Credits and Grants
a. Extensions
Communist commitments of new economic assistance to lesr:
developed countries continued at a high level in 1965 as East European
countries extended a record volume of new aid and. the USSR extended
sizable credits to three CENTO countries. Following peak annual exi,ens:c;n_
of nearly $1.7 billion in 1964, Communist countries extended a tota: of t;_"'
billion of aid to 22 less developed countries during 1965, increasing tie.,
aggregate aid commitments since the inception of the program in 1951 to rt-c.
than $7.7 billion (see Table 1 and Figure 2). Nigeria and Greece were
to the list of countries that have received Communist aid in the par. i,~:
in 1964, the major share of new economic assistance was allocated to Micc__
Eastern countries. Iran* was the largest single aid recipient; the UAR,
which received the largest amount of aid in 1964, was the second larrgesi.
The USSR and East European countries provided about
55 percent and 40 percent, respectively, of the new aid extended in
1965 and the remainder was supplied by Communist China. East Europ?~an
extensions of $491 million of economic aid in 1965 were about 50 pe--
cent above the 1964 level and 25 percent more than their previous peak
year extensions in 1961. The record commitments in 1965 reflected
the sharp upsurge in East Germany's aid undertakings as well aas heaay
commitments made by four of the East European nations to the dAR
Second Five Year Plan. East Germany assumed the lead among East
European aid donors with extensions of $202 million that exceeded
the aggregate of all East German aid undertaken during the previous
11 years of the aid program. Of the other East European countries,
Czechoslovakia contributed $118 million to the total for 1965 while
Bulgaria, Hungary, and Poland accounted for $172 million.
The USSR extended approximately $656 million ' new
economic assistance during 1965, of which an estimated $540 million,
or approximately 80 percent of the total, was designated for CENTO
countries. Although these countries had accepted only $91 million
of Soviet aid prior to 1965, their recent willingness to accept lar;e-
scale economic assistance was in part generated by a general d.issatLs-
faction with the level and type of Western aid, and Turkish and Pakistan:`
dissatisfaction with the lack of Western support in their conflicts wits
Greece and India in Cyprus and Kashmir. It also reflected the careL'ul
Soviet avoidance in recent years of attaching any political conditions
* The Soviet aid agreement with Iran was signed initially in 0ctobrr, )nnnt
the amount of aid was not announced until January 1966 after survey3 ha,t
been completed and a final agreement signed.
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ECONOMIC CREDITS AND GRANTS
BY COMMUNIST COUNTRIES
TO LESS DEVELOPED COUNTRIES OF THE FREE WORLD
EXTENSIONS AND DRAWINGS
53785 4-66
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to its aid -- namely, the disassociation of these countries from the
CENTO alliance. The USSR also extended credits totaling $84 millicn
to a private Greek firm for the purchase of ships, adding Greece tc
the list of aid recipients in spite of the fact that a government-
to-government transaction was not involved.
Communist China was the smallest aid donor during
the year, extending only $62 million in economic credits, compared
with its record commitments of $338 million in 1964. Afghanistan
and Uganda, recipients of credits totaling $28 million and $15 million,
respectively, were added to the list of countries receiving aid frcm
Communist China.
b. Distribution by Sector
At the end of 1965 the distribution by sector of tctal
Communist aid in recipient countries coincided roughly with the pattern
apparent four years earlier (see Figure 3). As in the past, by fax
the largest portion of economic assistance is being allocated to the
industrial sector, with assistance to agricultural and multipurpose
projects and to transportation and communications ranking 'next in
importance. The share of industry in the total has been increasing,
however, with recent Communist commitments to the Second Plan in the
UAR, the Bokaro steel plant in India, and to industrial development
projects in Iran and Turkey. Industry's share of the total rose from
approximately 54 percent at the end of 1961 to 58 percent at the erd
of 1965. Obligation for the construction of steel plants has assured
particular significance with the USSR having agreed to assist in the
construction of facilities with a total annual capacity of 8 millicn
tons, two-thirds of which was obligated during the past two years.
Another important change in recent years has been the increase in the
share of aid allocated to commodity imports, reflecting the growing
Communist awareness of the need to generate local currency to implement
the aid program more effectively. The share allocated for commodity
imports rose from 3 percent of the total obligations during the earlier
period to 6 percent at the end of 1965.
c. Drawings and Repayments
Drawings on Communist aid in 1965 are estimated to
total about $455 million, a decline of about 15 percent from the 1964
level of about $530 million. Total Communist outlays since 1954 rcse
to about $2.6 billion at the end of 1965. The drop that occurred in
1965 is accounted for by a reduction of about 40 percent in drawings
on East European credits and 10 percent on Soviet credits. On the
other hand, drawings on Chinese Communist credits rose by more than
50 percent to their highest annual level, primarily because of increased
transfers of cash.
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Concurrent with the rise in aggregate drawings, the
indebtedness of less developed countries to Communist nations for
economic aid also is increasing. At the end of 1965, their net in-
debtedness to the USSR and the countries of Eastern Europe was esti-
mated at approximately $2 billion. The less developed countries were
scheduled to repay in 1965 an estimated total of $115 million for
principal and interest on Soviet credits and approximately $45 million
on credits from East European countries (see Figure 4). This compares
with approximately $90 million and $40 million that was due to these
respective donors in 1964 and demonstrates the rapid increase in the
rate of repayments due as additional deliveries are made annually under
the program. As a result of these scheduled repayments, the net out-
flow of economic aid from the USSR totaled an estimated $215 million
in 1965 and about $20 million from the East European countries.
Again in 1965 there was evidence that a number of aid
recipients were unable to meet these heavy repayment obligations. In
some cases they requested concessions on old credits and softer terms
on new credit extensions. At least three countries -- Guinea, Mali,
and Yemen -- were allowed to defer current debt payments due to the
USSR in 1964 and 1965. Some concessions also were made by Czechoslo-
vakia and Poland to Guinea and Ghana, and Czechoslovakia agreed to
extend the amortization period on its 1962 credit to the UAR from the
original 5 to 8 years to 12 years. Extensions of new assistance especi-
ally by the countries of Eastern Europe indicated an increasing aware-
ness of this problem as longer repayment periods were applied to most
new extensions of aid. Most of the major new East European aid extended
in 1965 carried 10-to 12-year amortization periods and 2-1/2 percent
interest compared with the previous 8 year, 2-1/2 to 3 percent terms.
Nevertheless, by the end of the year, repayments totaling about $560
million were scheduled to have been repaid by the less developed coun-
tries to Communist countries. Even if program deliveries were to
remain constant at the 1964 level, annual repayments would increase
at a rate of between 25 and 30 percent a year and would thus be a
continuing problem.
Technical Assistance
a. Economic Technicians
fn spite of the decline in the level of drawings on
Communist economic aid in 1965, .the number of Communist economic
technicians employed in less developed countries increased by about
30 percent, rising to nearly 18,000 from the 14,000 present during
1964 (see Table 7*). A sharp expansion in the number of Chinese
Communist technical personnel accounted for about two-thirds of this
increase, with the remainder almost equally divided between the USSR
and Eastern Europe. The rise in the number of Chinese technicians
present in the less developed countries reflected an acceleration in
the pace of Chinese project activity in Guinea, Mali, and Yemen and
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SECRET
ALLOCATION OF ECONOMIC AID BY COMMUNIST COUNTRIES
TO LOSS DEVELOPED COUI4`TRIES OF THE FREE WORLD
BY END USE, Cymulative 1954-65$
(percent of total)
*!he component ports cannot be broken out s+ .e- mul"pn x,_,e
projects include dams that contribute to both t - a9-+c ar?
Sector and to the generation opre/ectricity.
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SECRET
Scheduled Repayments to the USSR and Eastern Euro e;
by Less Developed Countries of the Free World
for Economic Aid Drawn
1957-65
180
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increased the share of Communist China in the total number of technical
personnel present in the less developed countries in 1965 to 24 percent,
compared with only 12 percent in 1964. Although Chinese aid expenditur
during 1965 represented only 12 percent of total Communist outlays, ther
accounted for nearly one-quarter of all Communist technicians in that
year, reflecting the labor-intensive character of Chinese Communist aid
activities.
Concentration of Communist technicians in a few countri>,_
continued to characterize Communist technical assistance programs is th.
less developed areas. While about two-thirds of all technical pers.3nne_
were employed in Afghanistan, Algeria, the UAR, India, Guinea, Mali,
Nepal, and Yemen, the first four of these countries accounted for aopro_ -
mately 60 percent of all Soviet technicians and the latter four for neap v
80 percent of Chinese technicians. About 2,500 Soviet technicians were r.
the UAR, of whom 1,500 were engaged in construction of the main dam and
the electric power grid system eventually to be fed by the Aswan High D_.
About 1,230 Chinese were employed in Mali establishing rice, sugar Jane,
and tea plantations, and constructing small-scale industrial facilities.
Communist technical assistance programs not connected
with specific aid projects continued to employ approximately one-fourth
of all technicians sent to the less developed countries. The bulk Df
this activity was concentrated in Africa, where more than 40 percent
of the technical personnel from Communist countries weie engaged in
nonproject programs. Most of these personnel were employed as advisers
and planners, medical specialists, or administrators. For the first
time, Communist technicians were noted in Libya, where about 100 Soviet
and East European personnel were employed in nonproject activities.
b. Academic Students and Technical Trainees
In 1965, 1,690 students from less developed countries
enrolled for the first time in academic training programs in Communist
countries (see Table 9*). This was the third consecutive year in welch
new enrollments have declined and the lowest annual total since 195).
After the peak year of 1962, when about 5,600 students initiated aca-
demic programs, the number of new enrollees dropped to 3,670 in 1961,
to about 2,775 in 1964, and to 1,690 in 1965. The total number of
students from developing countries who have undertaken academic train-
ing in Communist countries since 1956 is now 21,200.
Continuing the pattern of recent years, African stuient;
were the most numerous and accounted for more than one-half of the stud -t>
enrolled in Communist institutions at the end of 1965. Asian students
predominantly from Indonesia -- comprised the second largest continent,
followed closely by those from the Middle East, while Latin American
students accounted for more than 10 percent of the total.
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Almost two-thirds of the total number of students who
have undertaken training in Communist academic institutions since the
beginning of the program in 1956 have done so in the USSR. An estimated
TOO students have gone to Communist China for training, the remainder
to Eastern European countries.
The declining enrollment of academic students in Commu-
nist universities could be attributed, in large part, to the backlash
of repeated incidents of racial discrimination, clashes with Communist
authorities, and student dissatisfaction with conditions in Communist
countries. Repercussions are still being felt in several African coun-
tries as a result of the murder in mid-March of a Ghanaian student at
Baku Preparatory School and the continued unwillingness of the host gov-
ernments to permit student political associations on a national basis.
Moreover, in contrast to the program in earlier years, both donor and
recipient governments are apparently adhering to more rigid academic
standards in the award of scholarships and insisting on certification
of completed secondary education as a minimum. The application of
educational prerequisites undoubtedly has reduced the number of students
eligible to fill scholarship quotas.
During 1965, 1,405 nationals from less developed coun-
tries initiated technical training programs in Communist countries,
bringing the total number who have undertaken this training since 1956
to almost 11,000 persons (see Table 8*). These trainees have included
skilled laborers and professional, organizational, and managerial
personnel whose training is related primarily to the manpower require-
ment for Communist-aided projects in their homeland. Although a large
part of this training is provided under economic aid agreements,
personnel also are being trained under agreements for scientific and
technical cooperation.
Concomitant with and complementary to the programs
for academic and technical training being conducted within Communist
countries, the Communists are expanding their educational assistance
programs abroad through the distribution of books and educational aids;
the provision of teachers; technical assistance to ministries of
education; the establishment of schools, institutes, and vocational
training centers; and on-the-job training related to Communist eco-
nomic aid projects. In June 1965 a Soviet source stated that 90 edu-
cational institutions were being constructed with Soviet assistance
in Asia and Africa.
C. Military Assistance
1. Credits and Grants
Communist countries extended about $200 million of military
aid to less developed countries during 1965, bringing the total of such
P.~l.
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aid extended since 1955 up to $4.3 billion (see Table 2). Althougt the
new aid commitments in 1965 were considerably below the near-record levw
of the previous year, the USSR and Czechoslovakia concluded important
new agreements with India which accounted for approximately 60 percent
of total aid extended in 1965. The USSR also signed agreements with
Algeria, Congo (Brazzaville), Indonesia, and Uganda. Communist China
concluded agreements with Algeria, Cambodia, and Uganda. The USSR
continued to be the chief supplier of Communist arms aid to less
developed countries and has provided more than 85 percent of the total
up to the present.
Military Aid Extended by Communist Countries
to Less Developed Countries of the Free World
September 1955 - December 1965
Million Current US -3
Estimated minimum value 4,51-2
Less downpayments L=)3
4, 3',`9
Credits 2,3 '7
Discounts and grants 1,(12
During 1965 arms deliveries under earlier agreements con-
tinued on schedule, relatively unimpeded by internal political upheavals
in some of the recipient countries. The flow of arms under the aid
program continued in spite of the governmental overthrow in Algeria,
open warfare between India and Pakistan, and an abortive coup in Indo-
nesia. In October, Morocco became the first recipient country to dis-
continue a Soviet military aid program, when the last six Soviet air
force technicians departed.
Soviet deliveries to the UAR of Tu-16 bombers, An-12 trans-
ports, all-weather MIG-21 jet fighters, and surface-to-air missile (SAN)
equipment ordered in November 1964 were made during the year. India
expanded its equipment orders in 1965 to include for the first time
large quantities of naval materiel, and at the same time progress was
made on the construction of the nascent MIG assembly plant. The war
with Pakistan over Kashmir in September heightened India's concern over
the possibility that only limited military aid might be forthcoming frc:n
non-Communist suppliers in the future. By the end of the year, additic ..
agreements, covering a wide range of defense needs, had been o.? were be l:4-1
negotiated with the USSR and other Communist countries.
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During 1965, arms aid to Indonesia was marked only by the
signing of a new agreement with Moscow for equipment repair facilities,
although deliveries under old agreements continued. In Afghanistan,
MIG-21's (the first deliveries of this type), T-54 tanks, and additional
SAM's were delivered. The SAM delivery indicates that Kabul intends to
install an air defense system based on the MIG-21 and SAM mix established
in India, Indonesia, and the UAR.
The USSR also implemented earlier agreements with Algeria,
Cyprus, Iraq, and Somalia and. continued its shipments of arms to dissi-
dent groups in Africa through such countries as Congo (Brazzaville) and
Ghana. In Cyprus the arrival of tanks, artillery, and SAM-associated
equipment, under the 196+ Soviet-Cyprus accord, intensified Greek-Turkish
communal tensions on the island. In Iraq the first known deliveries
were made of the all-weather version of the MIG-21 jet fighter, and S0-1
subchasers were delivered to Algeria. With deliveries of MIG-15's in
1965 the USSR continued to provide aid under the commitment made to
Somalia in November 1963.
a. Military Technicians
The number of Communist military technicians in less
developed countries rose to 3,870 in 1965, an increase of 17 percent
over the level achieved in 1964. Most recipients of military aid
employed more Communist technicians during 1965 than they had a year
before, but the major part of the increase was accounted for by the
expanding requirements of Afghanistan, Algeria, and India. In Indonesia
the number of military technicians declined, and in Syria, the UAR, and
Yemen the number remained the same as in 1964.
Besides assisting in the assembly of equipment and
instructing in its use, technicians are being sent to less developed
countries to help establish military production and repair facilities,
as in the MIG-21 production facility in India and the repair centers
to be built in Indonesia. With continued proliferation of modern
weapons systems into the less developed countries the number of Commu-
nist military technicians present in these countries should rise.
b. Military Trainees from Less Developed Countries
!haring 1965 a total. of 2,720 nationals from 15 less
developed countries enrolled in military training programs in Commu-
nist countries, primarily in the USSR. The number from Algeria
increased more than from any other country. Nearly 21,000 persons
have received this training, and 4,355 still were being trained at
the end of 1965. Indonesia has accounted for more than 40 percent
of the total number trained, and five other countries -- Afghanistan,
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Algeria, Iraq, Syria, and the UAR -- account for about another 45 per-
cent. Since the start of the program in 1955, the USSR has been
responsible for the bull: of the instruction and has accommodated about
85 percent of the total number trained.
D. Trade
1. Value
During 1965, Communist countries continued to conclude trade
agreements with the less developed countries, many of which called for
increased trade. In the first half of 1965, foreign trade turnover
between the Communist countries, excluding Cuba,* and the non-Communist
less developed countries amounted to $1.9 billion, or roughly 15 per-
cent above the corresponding period of 1964. This expansion was
accounted for primarily by increased Soviet and East European trade
with the less developed countries. Communist China's trade with these
countries declined slightly below the level recorded in the first half
of 1964. Of particular interest in 1965 was the continuation of large
sales of wheat by Argentina to the USSR and Communist China. Together.
these two countries contracted to buy 4.6 million tons of wheat, worth
at least $240 million, to be delivered between April 1965 and. mid-1P66.
In 1964, total Communist trade with the less developed
nations of the Free World rose to $3.6 billion, an increase of 12 I-er-
cent over the previous year.** The increase in imports exceeded that
* Cuba'a trade with the less developed countries during the first
half of 1965 totaled $77 million, compared with $74 million during the
comparable period of 1964. Morocco, Spain, and the UAR continued to
account for the major portion of this trade. For data on Cuba's exports
to and imports from individual less developed countries during 1962-64.
see Tables 12 and 13, pp. 75 and 77, respectively.
** Because of a lack of complete data for 1965, the remainder of this
section analyzes developments during 1964. It should be noted that the
value data on Soviet foreign trade with the less developed countries
are from comprehensive official Soviet foreign trade handbooks. For
Eastern Europe and Communist China, which do not report such comprehen-
sive trade data, the trade returns of the less developed countries have
been used. It should be noted that the figures used for Soviet trade
are the sum of the gigures given in the Soviet trade handbook for trade
with each less developed country and this sum amounts to $1,441. mil-
lion. This handbook also gives a total figure for trade with the less
developed countries of $1,589 million. The difference between the two
total figures could include Soviet deliveries of military items, which
are excluded from the country breakdowns and also from this section.
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of exports. The USSR did not contribute to this increase in trade as
it did during the first 6 months of 1965; instead, the growth during
1964 was accounted for by increased East European and Chinese Communist
trade with the less developed areas. East European trade with less
developed countries rose 12 percent in 1964 over the 1963 level to
almost $1.5 billion, and for the first time since 1961 this trade with
less developed countries exceeded. the total value of Soviet trade with
these areas. Communist China's trade with the less developed nations
showed the largest increase, rising 43 percent in 1964 to an all-time
high of $693 million to reflect its large grain purchases from Argentina.
On the other hand, Soviet trade with the less developed countries dur-
ing 1964 remained at the 1963 level of $1.4 billion. This leveling
off was caused primarily by the following factors: (a) a $69 million
decline in Soviet purchases of Malaysian rubber as the USSR apparently
drew down its stockpiles to conserve foreign exchange, (b) a $50 mil-
lion reduction in Soviet cotton purchases, and (c) a leveling off of
Soviet exports under long-term economic credits.
Although Soviet imports from less developed countries
showed an absolute decline in 1964, there was a 2-percent increase in
Soviet exports to these countries. As has been the case since 1958,
this growth in Soviet exports was caused by deliveries under long-
term credits rather than by commercial exports. The latter remained
stable at the 1963 level in 1964 (see Figure 5). Inasmuch as exports
by the USSR on long-term credit have accounted for 45 percent of its
total exports to the less developed countries in both 1963 and 1964
and since Soviet deliveries under these credit arrangements did not
increase significantly in 1965, Soviet exports to the less developed
countries for the year 1965 probably will show only a small increase.
Total Soviet trade turnover with the area, however, should be well
above the 1964 level partly because of increased purchases of Malaysian
rubber and Argentine wheat.
As a result of the leveling off of Soviet trade in 1964,
the Soviet share of Communist trade with the less developed countries
fell from 44 percent in 1963 to 40 percent in 1964. The share of
East European countries in this trade maintained the 1963 level of 41
percent, and Communist China's share of the total increased from 15
percent in 1963 to 19 percent in 1964.*
The share of the less developed countries in total Communist
trade in 1964 was 9 percent, the same share as in 1963: the Communist
area's share in the aggregate trade of the less developed countries
remained at 5 percent as in previous years. In spite of these relativly
low ratios, the Communist area continued to account for a major share
of the trade of certain less developed countries. For example, Communist
countries supplied more than one-fifth of the total imports of Guinea,
* For detailed data on Communist exports to and imports from individual
less developed countries during 1963-64, see Tables 10 and 11, pp. 67
and 7_i_, respectively.
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Trade of Communist Countries with Less Developed
Countries of the Free World, 1955-64
and Percentage Distribution, 1964
COMMUNIST FAR EAST
EASTERN EUROPE
USSR
2000
1000
1955
195
*Excluding $11.1 million of trade with So0hern FRodesk
Zambia which cannot be distrib,,ted e- Commun r coon
United Arab
Republic
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Mali, Afghanistan, Cambodia, Ceylon, and the UAR and absorbed more
than one-fifth of the total exports of Guinea, Mali, Greece, Afghanistan.
Syria, the UAR, and the nonpetroleum exports of Iran.* Communist coun-
tries also continued to purchase sizable portions of products that are
major earners of convertible currency for some less developed countries.
In 1964 these included purchases of 15 percent of Ghana's total exTort?
of cocoa beans and of 59 and 65 percent, respectively, of the UAR's
and Syria's total exports of cotton during the 1964-65 marketing year.
2. Direction
The geographic distribution of Communist trade with the
less developed countries during the first half of 1965 followed the
pattern of 1964, concentrating on Asia and the Middle East in general
and on India and the UAR in particular. In 1964, India and the UAF
accounted for 37 percent of Soviet and East European trade with the
less developed countries and for more than 45 percent of Soviet trade
alone. This concentration reflects the trade momentum generated by
deliveries under Communist, particularly Soviet, long-term economic
credits and the repayment of both economic and military credits in
the form of commodities., Communist China's trade in 1964 continued
to be conducted mainly with its Asian neighbors -- Burma, Ceylon,
Malaysia, and Indonesia -- and with the UAR. In addition, Argentina,
because of large grain sales to Communist China, became a major trading
partner and accounted for almost 30 percent of Chinese imports from
less developed countries in 1964. This relationship will continue
in 1965 because of the large purchases of grain made by China again
in 1965.
Asia continued in 1964 to account for the largest share
of Communist trade with the less developed countries (41 percent).
Communist trade with Asian countries in 1964 amounted to $1.5 bill'ien
and was 13 percent above the 1963 level. Communist exports to these
countries rose by 12 percent mainly because of increased shipments
to Pakistan, India, Ceylon, and Indonesia. Increased imports by
Communist nations from the latter three countries more than offset
the nearly 40-percent decline in purchases of Malaysian rubber and
accounted for most of the 13-percent increased recorded in Communist
imports from the area. Those from India increased almost 50 percent
above the 1963 level, with the USSR taking the major portion of this
increase. In fact, India was the only less developed country to
score a significant absolute increase in its exports to the USSR
during 1964.
Communist trade with the less developed countries cf th-
Middle East rose by 5 percent to $1.1 billion in 1964 and accounted
* For data on the Communist share of the total exports and imports
of selected less developed countries in 1964, see Table 14, p. 79.
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for 31 percent of Communist trade with all less developed countries.
Expanded. imports -- primarily from Greece, Syria, and the UAR --
accounted for most of this increase. Communist exports to the Middle
East rose by only 3 percent to a level of $610 million in spite of
increased Soviet deliveries to the UAR.
The share of Latin America in trade between the Communist
and less developed areas rose to 12 percent in 1964, compared with
9 percent in the previous year. This trade, amounting to $426 million,
showed an increase of 41 percent over its value in 1963, primarily
because of the large Chinese Communist grain purchases in 1964. Com-
inunist exports to Latin America rose only by 12 percent.
Communist trade with Africa in 1964 increased by 13 percent
to $483 million, but Africa's share in Communist trade with less de-
veloped areas remained at 13 percent. Communist imports from Africa
showed almost no increase, primarily because of smaller Soviet pur-
chases of cotton from Sudan and of copper from Zambia. Communist
exports to Africa, on the other hand, grew by 25 percent, largely
because of increased Soviet deliveries to Algeria and East European
deliveries to Ghana.
Communist trade with the less developed countries of
Europe -- Iceland, Portugal, and Spain -- declined by 18 percent to
$100 million in 1964 because of reduced trade with Spain. As a share
of total Communist trade with all less developed countries, these
European countries accounted for only 3 percent.
3. Commodity Composition. 1964
The commodity composition of the trade of Communist coun-
tries with less developed countries in 1964 showed some variations
from earlier years, particularly for Communist imports. Although
imports of food products and crude materials continued to account
for roughly 85 percent of total Communist imports, the share of food
products rose from 27.to 39 percent of the total, while crude materials
declined from 60 to 45 percent. This shift in the relative importance
of these two groups of goods applied to all Communist countries (see
Figure 6).
Chinese Communist purchases of food products, rising by
almost $100 million over the 1963 level, showed the largest absolute
gain in 1964, primarily because of heavy imports of Argentine wheat.
Soviet imports of food products rose more than 40 percent above the
1963 level to a record $250 million. Most of this increase was
accounted for by larger imports of rice and of coffee, cocoa, and tea.
The last three commodities, as a group, continued to hold first place
among Soviet imports of food products, accounting for more than 45 per-
cent of the total. Eastern European imports of food products from the
less developed countries were almost 30 percent above the 1963 level.
Approved For Release 2006[MAZ=FGI -RDP92BO109OR000400010024-7
 Approved For Release 2006/02/07 : CIA-RDP92BO109OR000400010024-7
OF THE FREE WORLD, BY COMMODITY GROUP,* 1962-64
TRADE OF COMMUNIST COUNTRIES WITH LESS DEVELOPED COUNTRIES
EXPORTS BY COMMUNIST COUNTRIES
USSR
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