SINO-SOVIET BLOC ECONOMIC ACTIVITIES IN UNDERDEVELOPED AREAS 1 JANUARY-30 JUNE 1960

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B01090R000400010010-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 126
• Document Creation Date: December 20, 2016
• Document Release Date: September 5, 2006
• Sequence Number: 10
• Publication Date: August 31, 1960
• Content Type: REPORT

SECRET
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ECONOMIC INTELLIGENCE REPORT
SINO-SOVIET BLOC ECONOMIC AC'rilkl
IN UNITE R DEVELOPED AREA
1 JANUARY' = 30 JUNE 1960
EI4-114--S9
31 August 1960
ECONOMIC I14 rELLIGENCE COMM I
RETURN TO RECORDS
IMMEDIATELY AFTER USE
JO >_,~wr OX_
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W ARRING
This nxate, i; y ccn taans information affecting
the Natiorsai Defense -of the United States
within the :-ean?ng of the espionage laws,
Title 18, is d Se--s. 7 and 994, the trans-
mission or .r velaton of which In any manner
to an U -n- LU ` rice( per a is t irohibited by law.
Pr - ed c;nd Disseminated
by
Cer P=al Ir.telligence Agency
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SECRET
ECONOMIC INTELLIGENCE REPORT
SINO-SOVIET BLOC ECONOMIC ACTIVITI
IN UNDERDEVELOPED AREAS
1 JANUARY - 30 JUNE 1960
EIC-R14-S9
ECONOMIC INTELLIGENCE COMMITTE
SECRET
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FOREWORD
The reports on Sino-Soviet Bloc economic activities in underde-
veloped areas in the EIC-R1A series provide periodic summari=es az,i
analytical interpretations of significant developments in the ecc?-
nomic relations of Bloc countries with underdeveloped countries cat'
the Free World. These developments are reported on a current, fa=-
tual basis in the Biweekly Reports in the EIC-WGR-1 series, .order
the same title.
This report, covering the 6 months from 1 January throuop
30 June 1960, constitutes the ninth periodic supplement to ITITC-R1+,
the background report on Sino-Soviet Bloc Postwar Economic Aetivi~ie
in Underdeveloped Areas, 8 August 1956, SECRET. The present supp,e-
went relates noteworthy noneconomic activities to the economic opf
the Bloc foreign aid program in 1954.
An outstanding feature in the evolution of the Bloc e(,-onou: c
aid program is the growing importance of large umbrella cred._s pr)-
vided by the USSR for general development purposes. Such credits -on-
stitute 80 percent of all financial pledges made by Bloc countries in
the first 6 months of 1960 and nearly 70 percent of total economic
credits and grants extended since January 1954. By offering such
credits long before they can be utilized, the USSR reaps substantial
propaganda gains at no immediate cost. At the same time, triter e c:r!dit.
* P. 103, below.
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foster the development of state at the expense of private enterprise
and assure the recipient country that substantial foreign aid funds
will be available when needed to meet the requirements of long-range
economic plans.
By extending new credits the USSR sought to consolidate past
gains in Indonesia, Iraq, and the UAR as well as to capitalize on
prolific opportunities in Cuba. With the signing of these new eco-
nomic agreements the USSR committed itself to finance a major part of
Indonesia's projected industrial development program, to resuscitate
the Baghdad-Basra railroad link, to complete the Aswan High Dam, and
to succor the revolutionary economic schemes of the Castro regime.
Between the spring of 1959 and the spring of 1960, no signi-
ficant new Bloc credits for military equipment were extended. Ex-
tensive discussions involving substantial fund.: were held with the
governments of Cambodia, Cuba, Ethiopia, Indonesia, and the UAR.
The progress of these talks has been such that announcement of Bloc
military aid agreements with one or more of these countries can be
expected in the near future.
Although the Bloc continued to press its offensive in the
Middle East and Asia, notable gains were scored in Africa and Latin
America. By midyear 1960, Bloc specialists held an impressive number
of positions as advisers to major departments in the governments of
Guinea and Cuba. In the former, Bloc experts also were placed in
direct charge of government operating units.
Supervision of the Bloc program in Guinea is exercised by
Soviet Ambassador Solod -- the first Soviet Ambassador to Egypt and
a ranking Soviet Foreign Ministry expert on the Middle East. Spe-
cialists from Moscow and Prague serve as high-level advisers to the
Ministries of Finance, Public Works, and National Economy and the Plan
as well as to the Director of Port Operations. In addition, Czecho-
slovak:; have been appointed by the Government of Guinea to the posts
of Director of Airports and Director of News Services.
Bloc relations with Cuba throughout the first 6 months of
1960 were conducted in a calculated manner, with the pledge of Soviet
financial.. support for industrialization and the conclusion of trade
agreements with various Bloc countries holding the center of the stage.
By the end of June, Premier Khrushchev had accepted an invitation to
visit Cuba; the USSR had established a foreign.-aid office in Havana;
and Bloc experts were serving as advisers in the National Bank of
Cuba, the Economic Development Commission, the Institute for Agrarian
Reform, the Petroleum Institute, and the Institute of Mining.
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At the same time, Bloc representatives in Cuba apparently-
cautioned local Communists against hasty attempts to seize power
overtly. Instead, they appear to have placed great stress on the
importance of gathering de facto control of the 'revolutionary move-
ment in the hands of the Cuban Communist Party. In this endeavor,
emphasis probably also was given to increasing the degree -f Comp;uniss
control over the system of internal security.
Early in July the USSR indicated that it was ready to step
up its support of the Castro government. Sergey Kudryavtsev, a f':ir-
mer consul at the Soviet Embassy in Ottawa and a highly skilled or-
ganizer of espionage networks, was named Soviet Ambassador to Cuba.
Shortly thereafter, in the wake of deteriorating US-Cuban relations,
Premier Khrushchev publicly announced Soviet diplomatic and finan2ial_
support for the Government of Cuba in its differences with the Urited
States, thus setting the stage for a new and more intimate relatiDn-
ship between Cuba and the USSR.
B. Credits and Grants*
1. Extensions
a. 1 January - 30 June 1960
During the first 6 months of 1960, Sino-Soviet Bloc
countries extended a record $786 million in new economic credits and
grants to underdeveloped countries (see Figure 1**). The U38R pro-
vided most of this sum, and all but a minor fraction was in the form
of credits (see Table 1***).
b. 1 January 1954 - 30 June 1960t
By the end of June, Bloc credits and grants extended
to underdeveloped countries passed the $4+ billion mark -- $ >> b lioi,
* Credit and grant extensions refer to minimum amounts of assi.=t-
ance earmarked under bilateral general assistance or project agref-
ments. Bloc credit and grant obligations refer to those portions of
credits and grants extended which have been designated for specific
uses or for which utilization has been arranged by firm construction
or delivery contracts. Credit and grant drawings refer to those por-
tions of credits and grants extended and obligated which have beer
spent for Bloc equipment or for the services of Bloc personnel.
** Following p. 10.
** Table 1 follows on p. 10.
t For statistical details, see Tables 8 and 9, pp. 79 and 80, re-
spectively, below.
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Bloc Credits and Grants Extended to Underdeveloped Countries
January-June 1960
Amount
(Million Current US $)
C
t
Underdeveloped
Country
Total
Credits
Grants
Purpose
Bloc
oun
ry
785,7
757.6
28.1
Afghanistan
.i.
3.5
Wheat
Cuba
100.0
Economic development
Guinea
0.2
Patrol boats
Indonesia
250.0
Economic development
Indonesia
2.4
Hospital
Iraq
45.0
Baghdad-Basra railroad
UAR -- Egypt
287.0
Aswan High Dam
Czechoslovakia
Cuba
20.0
Economic development
India
1.7
Tire factory
UAR -- Egypt
20.8
Equipment and machinery
East Germany
Ghana
3.1
Industrial projects
Communist China
Guinea
1.0
Industrial projects
Rice
Nepal
21.0
Economic development
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SECRET
EXTENSIONS OF BLOC ECONOMIC CREDITS AND GRANTS
TO UNDERDEVELOPED COUNTRIES, BY 6-MONTH PERIODS
July-December 1957 to January-June 1960
Current
800 -
3,600
3,200
2,800
2,400
2,000
1,600
1,200
800
400
0
JULY-DEC. JAN.-JUNE i(IIV-DEC.
1957 1958 958
July-December January-June
1957 1958
JAN, ?IUNE JULY-DEC. JAN.-JUNE
1959 1959 1960
July-December January-June
1958 1959
SECRET
I_,..._ , I J _-.. ..
July-December J~ IJa~y_h =J
1959 1960--
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for economic and $0.8 billion for military assistance (see 'able 2).
The USSR alone accounted for more than 75 percent of the aid provided
for all purposes.
Bloc Economic and Military Credits and Grants
Extended to Underdeveloped Countries, by Recipient Area/
January 1954 - June 1960
Total
Economic
Military
Total (million current US $)
4,051+
3,231
822
Percent of total to countries in:
Middle East
47
40
75
Africa
4
5
Negligi ale
Asia
40
44
25
Europe
3
4
0
Latin America
6
7
0
a. For additional details, see Table 9, p. 0,
The Bloc credit program is coming more and more t,) be
dominated by large umbrella credits provided by the USSR for general
economic development schemes. Nearly 70 percent of total Bloc ec-)-
nomic assistance since January 1954 is represented by 13 major li:es
of credit -- each of which is for $100 million or more -- all ext~mnd i
by the USSR to 9 underdeveloped countries.* Among these countries,
only India, with its comprehensive economic plans, has entered in,o
negotiations for large umbrella credits with specific and detailed
proposals concerning allocations of the funds to be provided.
* For details of these lines of credit, see Table 11, p. 83, bel,.w.
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2. Obligations*
a. Current and Cumulative
Preliminary survey work and negotiations on projects
being considered under existing economic and technical accords during
the first 6 months of 1960 resulted in agreements that obligated al-
most $900 million of outstanding credits and grants. By late June,
80 percent of Bloc credits and grants extended for economic and mili-
tary purposes had been obligated, thus maintaining about the same pro-
portion that prevailed at the end of 1959?
b. Allocation of Economic Aid
OBLIGATION OF BLOC ECONOMIC CREDITS AND GRANTS
TO UNDERDEVELOPED COUNTRIES, BY TYPE OF PROJECT
A. of 30 lone 1960
More than one-half of all
funds obligated under the Bloc's
economic assistance program have
been channeled into projects that
Hnahh, Edo> of
the dam were being substantially neutralized by developing Western
assistance programs which were having a growing impact on the UAR.
Announcement of Soviet participation in the second stage of the A3wan
High Dam was timed to coincide with the start of the well-pu_d_,lici,ed
US trade mission and was just before the arrival in Cairo of a hirr,h_
level West German economic mission that was expected to discuss GP
participation in the second stage. Another important element in he
Soviet decision to highlight this economic aid to the UAR was un-
doubtedly its value in the Bloc's current intensive drive to cult_vat+
the emerging nations of Africa. By trading on the UAR's name, any[ wig.
the dam as a specific example, the USSR is indubitably trying to __n-
crease its influence and prestige in the newly independent A 'ricai
states by creating a favorable image of itself as an economic bentfac
for who attaches no conditions to assistance.
There is no evidence that the Nasser regime intc_r_is t
mitigate its repression of domestic Communism or its opposition t-;
Communism in the Arab World. The UAR reacted strongly to BulgaritLn
attempts to indoctrinate UAR students in Sofia and to alleged Bul-ariti
encouragement of Communist activity in the Syrian sector. During his
tour of Syria in February, Nasser devoted one of his speeches there tt
an attack on Communism.
on 18 January 1960 it was officially announced that t.e
USSR would assist the UAR in the completion of the Aswan High Dam.
This new aid agreement will represent a credit of $387 million, ix.-
cluding the original loan of $100 million for construction of the
first stage of the dam. As now planned, the Soviet credits represent
total foreign exchange requirements for construction. Remaining ?erm>
and provisions of the new loan agreement are said to be the same s.s
those of the former -- 2.5 percent interest and repayment in equal
installments over 12 years starting in 1964.
A Czechoslovak-UAR agreement signed in June provides for
a 5-year credit of $20.8 million for the purchase of machinery and.
equipment to be used in the construction of various public utility
projects in the Egyptian sector. Czechoslovak concentration on rural
and municipal projects promises to give Czechoslovakia a commandirg
position in the supply of this type of equipment to the UAR.
The execution of projects under the $175 million Soviet
credit has been slow, and actual additions to the volume of industrial.
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production have been virtually nil. On 8 May 1960 the first project,
a mill for spinning fine cotton yarns, was opened in Damietta, and
another mill, financed under the Soviet credit, is under construction.
Completion of larger contracts is years away, even in those cases for
which equipment contracts have been signed. Most of the delays have
been caused, however, not by the Bloc countries but by the Egyptians,
who either have been casting around for better deals elsewhere or have
set impossible terms, specifications, and conditions.
Implementation of the Soviet agreement of October 1957
with the Syrian sector has been confined mostly to surveys and plan-
ning; only about $25 million of the $150 million extended has been
drawn. Inaction in Damascus probably is the cause. A Soviet mission
arrived in Damascus last spring and in May announced that a protocol
regarding implementation of projects in the Syrian sector was being
prepared. The Damascus press reports that these projects may include
proposals on a railroad line between .Aleppo and Qamishli, topographical
work in the Euphrates area, and the construction of an ammonium nitrate
fertilizer plant with a capacity of 110,000 metric tons. Contract
projects presently under construction are the Ar Rastan and Muhradah
dams by Bulgarians and a cement plant at Aleppo by the East Germans.
No definite information is available on the number of
Bloc technicians in the UAR except for those working on the Aswan High
Dam project. The number considered necessary for that project is now
70, 30 of whom had arrived by the middle of May. These technicians
have had little or no contact with the local labor force but are en-
gaged only in advising their counterparts among the Egyptian upper-
level technicians.
The Czechoslovak-UAR trade agreement now in force is valid
for 3 years from 1 January 1959, and the payments agreement for 1 year
from the date of ratification, both with an_automatic extension of
equivalent periods if notice of termination is not given. Terms of
the agreements are not unusual, except that 'Lists are attached for
specific development projects for which Czechoslovakia stands ready to
provide equipment, machinery, and materials. In the case of UAR pur-
chases, Czechoslovakia insures corresponding purchases of cotton and
other goods from the UAR.
In the course of a review of UAR-Soviet trade, Soviet of-
ficials objected to being deprived of Egyptian export discounts and
UAR officials protested Soviet resales of Egyptian cotton in Western
European markets. A protocol was eventually signed, hopefully envi-
sioning a total trade exchange of $287 million per year for both sec-
tors of the UAR.
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Egyptian imports from the Bloc dropped by more than i.6 pcent in 1959 compared with 1958. Because Egypt's total imports so
fell, however, the Bloc's relative position as a supplier Egypt
clined only slightly. But during the first 4 months of 1%-0, when
Egypt's total imports increased slightly compared with the same per!)
of 1959, the Bloc's relative position as a supplier suffered. This
fact appears to confirm that Egypt prefers to trade with n(-)n-Blc_-
countries and will do so when it can. Although exports to the Bloc
have risen in 1960 and the USSR remains by far the largest purchiser
of Egyptian goods, the Bloc share fell from 52 percent in 11)59 t
47 percent in the first part of 1960.
Trade data for 1959 reveal a decline in Bloc trade with
the Syrian sector. Over-all trade with the Bloc reached a :peak In
1958 when exports reached 31.4 percent and imports (excluding arias)
were 12.1 percent of the total foreign trade of the Syrian recto:
In 1959 these shares were reduced to 12.3 percent and 11.2 serceit,
respectively. France replaced the USSR as a purchaser of 1;Jrian cote--
ton in 1959, and it continued to be the leading buyer in trie cur,ent
export season. The proportion of cotton sales to the Bloc and Com-
munist China, however, rose to about 35 percent during the c urreait
season, compared with 30 percent last year. The difference was ome=
what after the first shock of Indonesia's execution of its ban against
Chinese traders in rural areas in late 1959 and early 1960. Fricy,ion
continued, however, and relations worsened sharply again in the lt;.te
spring as both sides reacted emotionally to an incident arioing from
the repatriation of a shipload of Chinese. For the moment, econoaic
cooperation between the two countries was out of the question, and
Indonesia dropped China's $30 million credit offer from consideraa:ion.
Business newspapers in Djakarta reacted skeptically ti= tht-
announcement of the USSR's new $250 million line of credit, point_ng
out that only some $25 million had been drawn from the previous $:l7.E
million credit, although it had been ratified by the Indonesian PL.r-
liament Bally 2 years before. Soviet construction projects under:aker
have indeed gone slowly because of Indonesian delays. Serious co.t-
struction work has begun only on the Asian Games stadium at Djakarta
and on the Southeast Borneo road network. Initial construction c3n-
tracts for the West Java steel plant have been signed, and the Am -toin?.
shipbuilding and oceanographic school and the superphosphate plan;
for Central Java remained in the survey stage.
Moreover, rapid progress cannot be expected. Nearly
everything, from day labor and foodstuffs to construction machine ?y,
must be imported to the work sites at Amboina and Southeast Dorne- on
the ships of Indonesia's very undependable interisland services. The
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relatively sophisticated construction method; adopted for the Asian
Games stadium require large quantities of aggregates that are more
refined than Indonesian contractors are accustomed to process and
that must be brought from a considerable distance outside Djakarta.
Affecting all the projects, but most particularly the steel and
superphosphate plants, is Indonesia's failure to begin training
managers and technicians.
Negotiations on the use of the $250 million credit began
in Djakarta in mid-June and are to be carried. forward during First
Minister. Djuanda's visit to Moscow in early July. With its emphasis
on relatively advanced technology -- major projects in iron and steel
are planned as well as introductory programs in atomic energy -- it is
unlikely that the new line of credit will be drawn any more rapidly
than the first. There is as yet no evidence as to how much of the
total will be allocated to projects involving; delivery of equipment
only.
Speed of execution is, however, only one of several fac-
tors to be considered in assessing the impact of the Soviet program,
and the fact remains that the projects will effectively identify the
USSR with the achievement of Indonesian aspirations on a national and
particularly on a provincial level. Thus construction of a large
modern technical school is a major event in stagnant Amboina, as is
the large-scale Soviet effort in the backward. provinces of Southeast
Borneo. In the Asian Games stadium and the West Java steel mill the
USSR is supplying status symbols of national importance. Moreover,
negotiations on the use of the $250 million overlap with the last
stages of preparing Indonesia's Second Five Year Plan, permitting the
USSR to offer immediate support to the most promising projects now
being considered.
Evidence of other credits contracted during the first 6
months of the year is still incomplete. During the period, Indonesia
arranged to buy 70,000 telephones and five 1,500-ton freighters from
Hungary at a total cost of about $6 million. It is certain that a
substantial part of the purchase price was financed on credit, prob-
ably at fairly long term. In May the Indonesian Air Force took de-
livery of the first 4 of 20 Soviet helicopters under an October 1959
contract that specifies a total price of $5.5 million, no downpayment,
and terms of 10 years at 2 percent. Indonesia is also reported to
have accepted the Soviet offer of a cruiser, several submarines, and
other naval equipment made during Khrushchev's visit in February,
but no details of the transaction are known.
Bloc technical assistance programs were considerably more
active in early 1960 than in the previous 6 months. Intensified sur-
vey work accounted for much of the increase, as Soviet survey teams
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of one or two to half a dozen men paid repeated visits to actaal ?r
proposed construction sites in Amboina, Southeast Borneo,.anu Javi.
A small group of East German experts surveyed for a textile mill Ln
Medan, a Czechoslovak team investigated the possibilities o!' buil,iin
a cement plant near Makassar, and Polish experts began a survey f=)r
the shipyard to be constructed in the Celebes. The number ~_i Boy
technicians stationed at construction sites also increased. It i
estimated that the Soviet engineering team assigned to the krneo rows.:
project was built up from 6 to 25 men; perhaps as many Soviet exp=arts
were employed at the Asian Games project. Groups of two and three
Czechoslovaks are still stationed at the mechanized rice prot':ects in
North and South Sumatra and in South Borneo. Apparently none hav,!
any agricultural training, and they operate only as maintenance a?id
repair men. A single Czechoslovak manager remains at the Intirub
tire factory at Djakarta.
The largest concentration of Bloc personnel continued to
be the same 50 Polish and East German officers employed by the na-
tional shipping line Pelni. Working relations with Indone.ens were
satisfactory on the whole, although during the spring there was some
bad feeling at the Asian Games and mechanized rice projects.
The Bloc drive to penetrate higher education in indonesia
showed considerable progress in the first half of 1960, largely bre-
cause of the sponsorship of Indonesia's fellow-traveling Minister of
Education. A program implementing the cultural convention signed dur?
ing Khrushchev's visit in February was initialed in June, and sho?tly
afterward Indonesia announced that the number of Indonesian E,_udeets
studying in the USSR would double during the coming school year. The
number of Indonesian students attending Rumanian, Polish, and. Cze:ho-
slovak universities also is rising.
Bloc trade with Indonesia increased again in the secom.d
half of 1959, and for the first time the Bloc share of Indonesian ex-
ports exceeded 10 percent, up from 6.4 percent in the preceding hLlf-
year. The value of Indonesia's imports from the Bloc -- still dr?-.wn
almost entirely from Communist China -- also increased, but the BJJoc
share fell from 14.3 percent to 71.4 percent. Although its perform-
ance improved as the year went on, Communist China fell behind schedule
in rice deliveries and delivered only 267,000 tons out of a contrected.
total of 340,000 tons. As a result the Indonesian Government did not
place large rice orders in Communist China for 1960 delivery, and the
Bloc share in the Indonesian import market is expected to drop ap;?re-
ciably this year.
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6. Federation of Malaya and Singapore
Vigorous antisubversion policies left little scope for
either Bloc or local Communist activity in the Federation of Malaya
in the past 6 months. In May the Federation Government declared the
12-year-old Communist-provoked "emergency" at an end. Extraordinary
policy powers granted under emergency legislation lapse at the end of
July, but Parliament has already enacted an internal security law pro-
viding an even stronger array of antisubversion weapons. The Federa-
tion holds in readiness antidumping tariff authority specifically de-
signed, to control an aggressive Bloc export campaign such as Mainland
China waged in 1958. Although in June Prime Minister Rahman startled
his colleagues in the government by advocating Communist China's ad-
mission to the UN as a necessary step in the search for world peace,
the Federation intends to continue its policy of nonrecognition of all..
Bloc governments. Controls on travel and remittance to Communist
China remain in effect.
Federation attitudes exert a powerful discipline on Com-
munist and pro-Communist activity in Singapore. Both the opportunist
leadership of the ruling Peoples Action Party (PAP) and the Party's
strong extremist wing accept merger with the Federation as a major
political goal, simply because neither feels it could long survive in
power without Federation economic cooperation. Equally important is
the Federation's decisive voice in the Singapore Internal Security
Council and its influence on the manner in which the UK exercises its
retained prerogatives in the fields of foreign relations, defense, and
public security.
Although the Singapore Government pressed hard for accept-
ance of the visit, there is no reason to believe that it intended to
seek closer relations with the Bloc immediately. Its intention, rather,
appears to have been to test the UK's resolution to defend UK preroga-
tives as well as to dramatize its need for foreign assistance on a
large scale and also to reaffirm its willingness to seek assistance
from the Bloc if sufficient capital were not forthcoming from the Free
World.. Although current high rubber prices give Singapore a surface
prosperity, private investment is flagging and unemployment remains
high. As yet the PAP can show little progress toward its much-publicized
goal of economic development.
It is possible, also, that the PAP leadership feels that
some measure of Bloc sponsorship would be an asset in its struggle
against growing extremist pressure within the party itself. The
leadership is clearly digging in against an expected extremist on-
slaught: preventive detention authority has been extended for an un-
precedented 5 years, the trade union movement reorganized, and the
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right to strike circumscribed. A limited pattern of cooperation with
UK authorities and the opposition has been established.
Malaya-Singapore imports from Communist China show only
slight recovery from the 1959 slump that followed reciprocal emb&rgoe3
imposed in late 1958. Imports of Chinese goods amounted to 4.6 prce r
of total imports in the first 4 months of 1960, compared with, 4.1 per-
cent in the corresponding period of 1959, whereas purchases 'f go-ids
from other Bloc countries remained trivial. Except for Peip ng's ban
on direct exports of textiles to the Federation -- imposed in Ser;em-
ber 1959 in retaliation against alleged Federation discrimination --
the China import trade is now free of quantitative restrictions. Corn
munist China's sales in the Federation remain low as a result of he
closing of Bank of China branches in March 1959 and continued police
surveillance of merchants who handle Chinese Communist goods. Soviet
purchases of rubber, whose exceptional volume in 1959 catapulted the
USSR into fourth place among Malaya's customers, fell off sharply in
1960. Increased exports to Communist China, Czechoslovakia, and
Poland somewhat offset the drop, but the Bloc's share of Malaya-
Singapore exports decreased from 14 percent in the first 4 me>nths of
1959 to 8 percent in the same period in 1960.
7. Nepal
The pace of Communist Bloc activity in Nepal was cons-der.
ably accelerated in the first 6 months of 1960 in an effort to inoure
Nepal's continued neutrality and to discourage Western influence. Car-
munist China was especially concerned to overcome Nepalese suspic_ons
arising out of Peiping's repressive actions in Tibet and its aggreessie
actions on the Sino-Nepalese border. During Prime Minister Koira-'-a's
visit to Peiping in March, Communist China agreed to a definition of
the Nepalese-Tibetan border, offered $21 million to Nepal in gram aic,
and proposed the conclusion of a Sino-Nepalese treaty of peace ann
friendship, whereas Nepal agreed to permit the establishment of a
resident Chinese Communist Embassy in Katmandu, to accept Chinese Com-
munist technicians, and to send Nepalese technicians to Communist Chira
for training.
At the same time that both the USSR and Communist Chira
have been working to appear friendly and reasonable to the Nepalese
Government, they have also been stepping up their subversion and r;rope-
ganda campaigns. The Chinese Communists have been propagandizing among
Nepalese border tribes of Tibetan ethnic origin in an effort to irjduce
an allegiance to Tibet. Along with the USSR, the Chinese Communists
reportedly have given covert backing to at least two campaigns of Nepa-
lese opposition groups designed to embarrass the Nepalese Congress
government. Both Bloc countries reportedly have strengthened their
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liaison with the local Communist Party. In addition, there has been
some expansion of the distribution of Chinese Communist and Soviet
publications by the Nepalese Communist Party through eight reading
rooms throughout the country.
Nepal's economic relations with the Bloc were highlighted
by the signing in Peiping in March-of a $21 million economic and tech-
nical cooperation agreement with Communist China. The agreement stipu-
lated that the $21 million grant to Nepal plus an additional $8.4 mil-
lion (unused portion of a 1956 Chinese grant to Nepal) are to be drawn
within the next 3 years, although the period of validity may be extended
by mutual agreement. Chinese Communist technicians will be sent to
Nepal, and Nepalese will receive training in China. The new aid as
well as the unexpended balance from the earlier grant will be spent on
specific projects -- roads, a paper mill, a cement plant, and power fa-
cilities. It is very doubtful whether Nepal will be able to utilize
all of the grant within 3 years, but continuation of the agreement be-
yond this period is provided for. Reaction in Nepal to the agreement
was very favorable.
A cement plant near Hitaura and a paper mill in the Nepal-
ganj area of western Nepal are apparently the first projects to be built
with funds from the Chinese grant. In early June, there were 15 Chi-
nese Communist technicians in Nepal engaged in making feasibility
studies for the cement and paper plants, with 20 more expected before
the end. of the year. As far as is known, formal project agreements
for these installations have not yet been signed between the two coun-
tries, and implementation of the grant is not expected until a Nepalese
team has observed the working of comparable installations in Communist
China. Chou En-lai in a speech before a Nepalese trade organization
suggested joint Chinese-Nepalese construction of a road linking Nepal
with Tibet, but Prime Minister Koirala rejected the idea, citing the
uneconomical nature of such a project in the light of the small amount
of trade between the two countries.
Nepalese officials confirmed press reports that Nepal has
accepted a Soviet offer to make a detailed ground survey of an east-
west road running the length of the southern plain of Nepal. An
earlier aerial. survey for such a road was completed last year under
the terms of the 1959 grant-aid agreement with Nepal. Acceptance of
the Soviet offer has increased very materially the likelihood of the
USSR's ultimately actually building the 550-mile road, which if suc-
cessfully done would be an impressive monument to Soviet engineering
skill and have a great propaganda impact in Nepal. The cost of the
detailed ground survey probably will be met from the 1959 Soviet-
Nepal agreement. The Soviet technicians apparently have favorably
impressed various Nepalese officials with the speed and efficiency
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of their preliminary surveys of the east-west road project. Meal.-
while, Soviet technicians reportedly have surveyed the area: and
chosen the sites for the sugar mill, hydroelectric project. and:c.ig
arette factory. Additional Soviet teams are expected in October to
supervise the actual construction.
In spite of Nepal's acquiescence in Chinese demands That
a provision for sending Chinese technicians to Nepal be included in
the grant-aid agreement, Nepal remains reluctant to accept such -echw
nicians in great numbers and probably will seek to confine their
presence in the country to a minimum period of time. There is e^_i-
dence that Nepal is concerned over Bloc interference in its :internal
affairs, although Soviet and Chinese diplomatic personnel reside2:t ir.
Katmandu allegedly have been involved rather than Bloc technicians.
The Chinese Communists reportedly spent $4,000 to finance demonsra
tions against the Gandak agreement (an Indian-Nepalese power protect
in eastern Nepal) and offered another $4,000 to three Nepalese nnws-
papers for anti-Indian propaganda. The Government of Nepal has v.arn?=
Bloc personnel against becoming involved in Nepal's domestic affF:irs.
Nepal's need for developmental assistance, its neutralist
foreign policy, its desire to avoid undue dependence on India, aid it?
geographic proximity to Communist China combine to make it r~cepiive
to attractive Bloc overtures and reluctant to antagonize the Blot.
Nepal is vulnerable to BLoc subversion and propaganda carried on with-
in the country because of the great degree of political illiteracy it
the electorate and its lack of national identity together with the
severe weakness of local government organization. Given these fec-
tors and indications that some progress will be made on aid projects,
it seems probable that the increase in Bloc influence during the first
half of 1960 will remain a threat to internal stability.
8. Thailand
Thailand cointinues to be a difficult area for Sino-Soviet
activities. Since the October 1958 Army coup, the government; has
maintained the strong measures aimed at controlling the kingdom's
small Communist movement, and it is doubtful that Thailand will under-
take a serious reassessment of its alignment with the West and active
participation in SEATO. Greater receptivity to Bloc trade in. 1960
is motivated primarily by Thailand's desire to increase exports.
Over-all trade deficits have widened in 1958 and 1959, but balance-
of-payments difficulties have been avoided by greater relian_-e ors
external aid. If Thailand's exports to the Bloc should increase;
this trade may be used to dramatize both Thai dissatisfaction with
US support to neighboring neutrals and the need for greater financial
assistance.
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Other than in the field of trade, Thailand continues to
restrict severely its relations with the Bloc. The Thai Government
has agreed to permit the stationing of a TASS representative in Bang-
kok to replace the one who was deported in October 1958 for "activi-
ties dangerous to the peace and security of the nation," but his ac-
tivities doubtless will be carefully circumscribed by the Thai police.
No exchanges of cultural delegations between Thailand and members of
the Bloc took place during the first half of 1960, and no Thai students
have left for study in Bloc countries.
Thailand's trade with the Bloc in 1959 and the first 2
months of 1960 continued to represent only about 1 percent of total
trade. The chief change in the trade pattern in 1959 was the curtail-
ment of trade with Communist China and the entry of the USSR and
Czechoslovakia into the Thai rubber market. Thailand's exports to the
Bloc in 1959 were almost entirely rubber shipments -- $2.1 million to
the USSR and nearly $0.3 million to Czechoslovakia. A ban on imports
from Communist China imposed in January 1959 prevented imports from
this source. The ban was effective in preventing not only the small
amount of direct imports but also the larger quantities of Chinese
goods entering Thailand by way of Hong Kong.
Bloc countries appear to be increasing their efforts to
stimulate trade in 1960. Rubber authorized for shipment to the USSR
and Czechoslovakia amounted to about 4,000 tons for the first 4 months.
This figure may be compared with rubber exports to the Bloc of 3,302
tons in 1959, which represented about 2 percent of total rubber ex-
ports. Although purchases at the new rate may not be continued for
the balance of the year, they are already substantial enough to indi-
cate a step-up in Bloc trading activity.
D. Europe
1. Iceland
The Bloc continued to utilize the Icelandic Communist Party
as a vehicle for the advancement of its political goals in Iceland:
(a) the elimination of US forces, (b) Iceland's withdrawal from NATO,
and (c) the establishment of economic dependence on the Bloc. The
Icelandic Communist Party has a membership of about 900 and polled
16 percent of the vote in the October 1959 elections. It supports the
Bloc propaganda effort through its press and front organizations. The
Communists have especially sought to exploit the lengthy Icelandic dis-
pute with the UK over UK trawlers, protected'by the British frigates,
fishing close to Iceland. The Communists point to the fact that for
the last 8 years the Bloc has furnished the principal market for pro-
cessed herring and frozen fish fillets, products that Iceland can
sell in the West only with difficulty.
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In February 1960, Iceland took drastic action to stab.4lizt
its economy and to improve the competitive position of its exports by
a 57-percent devaluation of its currency. The effectiveness of tl e
currency devaluation, however, may be limited by expected increases ix
the tariff on fish in potential markets of the European Economic Com
munity (EEC), and this tends to jeopardize Iceland's effort to miz.i-
mize its trade with Bloc countries. The other NATO member countries
have agreed to discuss special conditions that could be afforded ':ce-
land to help it out of its trade dilemma.
Trade between Iceland, and the Soviet Bloc in 191)9 rem ine
at about the same level as Jr 1958. Icelandic exports to tke Soviet
Bloc accounted for 34+ percent of the total, and imports from the .floc
amounted to 31 percent of the total, about the same as in 1x,8. (om-
position of trade remained virtually unchanged. The USSR co tines s tc
be the largest single trading partner, closely followed by the Un ted
States.
In January 1960 an extension until 1962 of the original
Icelandic-Soviet trade agreement of 1953 was signed in Moscow. The
level of exports and imports is not known, but it appears that thra
total value of trade will be approximately the same as that of tho
last several years. The Icelandic delegation succeeded in getting thv
USSR to accept a larger quantity of salted herring than that whidi thy-
USSR originally had intended. After signing the Soviet-Icelandic Trait
Protocol, members of the Icelandic delegation to Moscow stopped is
Warsaw to discuss pending trade problems.
Bloc efforts to influence Iceland in political and eco-
nomic matters have met with increased resistance. With the -ucce;s-
ful launching of the Stabilization Program, the country may soon ')e
able to consider membership in the European Free Trade Assoc:i.atioi
(EFTA). A membership would assist Iceland in reducing present com-
mercial dependence on Soviet Bloc countries.- Although Bloc tffor'tis
to separate Iceland from NATO have not been successful, a solutio'
to the UK fishery problem is needed to make Iceland a stable member
of NATO.
2. Portugal
Portugal's trade with the European Satellites is quite
small and exists chiefly to enable Portugal to market its surplus
cork. On the other hand, trade with the USSR, which is on a barter
basis, consists largely of the exchange of miscellaneous Portuguese
commodities for Soviet petroleum and petroleum products. Althou;:-l
the Portuguese authorities also permit the procurement of machinery
items from the USSR, they make it a condition of purchase that nei.the=-
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the installation nor the functioning of such machines shall require
the assistance of the suppliers. Trade with the USSR, therefore,
cannot be used. as a device for getting Soviet technical personnel
into Portugal.
In 1959, Portugal's total imports from the Bloc were about
1 percent of total Portugese imports, and exports amounted to about
2.3 percent of total exports. Within the Bloc, Czechoslovakia and the
USSR are Portugal's most important trading partners. Preliminary fig-
ures indicate that Portugal's trade with the Bloc in 1960 has not in-
creased above the 1959 level.
Spain
Spanish trade relations with the Bloc have never been
intensive. Although closer ties with the Free World system of for-
eign commerce may be expected to make trade overtures by the Bloc
less interesting to Spain, it is probable that at least a small amount
of Bloc trade will continue. The Bloc is a market for some of Spain's
agricultural and mineral products, and Spain can find use for indus-
trial equipment from almost any source.
For several years, Spain has negotiated trade and payments
agreements between its foreign exchange office and the central banks
of Poland, Czechoslovakia, Hungary, Rumania, and Bulgaria, whereas pri-
vate barter agreements govern trade with the USSR and East Germany.
There are some indications that Spain may negotiate unofficial trade
and payments agreements with the latter two countries.
In 1959, Spain's trade with the Bloc rose slightly above
that of 1958, accounting for 2.4 percent of its total imports and for
4.2-percent of its exports. Its most important trading partners in
1959 were Czechoslovakia and the USSR, which together accounted for
more than one-half of Spain's total Bloc trade. As in previous years,
Spanish trade with the Bloc was based chiefly on the exchange of cork,
citrus fruits, nuts, minerals, and metals for machinery and equipment
and miscellaneous fabricated items.
Trade agreements for 1960 were negotiated between the
Spanish Foreign Exchange Office and the Central Bank of Czechoslo-
vakia for an exchange in 1960 of goods worth $9 million each way. A
supplementary agreement with Poland was negotiated in March 1960 that
provides for Poland to supply $3 million worth of machinery of various
types to Spain in return for $3 million worth of marine craft and re-
lated equipment.
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4+. Yugoslavia
Yugoslavia's relations with the Bloc during the irst, half
of 1960 were highlighted by the polemics that arose with Mcs_.ow'? at-
tack on the attitude that Belgrade took toward the U-2 incident &rd t <
summit failure. In a statement on 17 May, Tito deplored the U-2 1.nci-
dent but argued that it should not be used as a "pretext" for wre-!kin-
the summit. The Chinese Communist and Albanian press imnedlatel~
seized upon Tito's statement as proof of Yugoslavia's willingness to
serve the imperialist aggressor, but their attacks were quickly aver
shadowed by a sweeping denunciation of Belgrade's revisionist int~rt
and external policies carried in the 23 May issue of Moscow's Kowmu.-
nist. This attack was the first from the USSR since early
~s59 ad
appeared to foreshadow a harder Bloc policy toward Yugoslavia.
At the end of June, however, Yugoslav-Bloc relations
seemed to be continuing along the same lines of limited detente a;
they had in 1959 and early 1960. Except for Chinese Communist and
Albanian diatribes, there has been almost no followup on the Komm,-
nist attack. Even a sharp Yugoslav rebuttal has gone unanswered.
State-to-state relations (mainly economic) have not deteriorated.
There has been no change in the status of the Bloc credit program in
Yugoslavia.
Yugoslav-Bloc trade in the first quarter of 1960 was
33 percent higher than in the same period of 1959. Exports rose
20.4 percent and imports rose 42 percent. The USSR, East Germany
Poland, and Czechoslovakia were Yugoslavia's largest Bloc trading
partners, in that order. Yugoslavia's trade with Bloc countries Las
increased, but the Bloc's percentage of total Yugoslav trade has i:e-
clined because of the growth of Yugoslav trade with the rest of t.-,e
world. Yugoslavia's trade with the Bloc countries in the first
quarter of 1960 was 24+.7 percent of its total trade, during the f-rst
luarter of 1959 it was 26.6 percent, and for all of 1959 it was
27.3 percent.
Yugoslavia and the USSR scheduled negotiations to begin
in July for a 5-year agreement to succeed the 3-year agreement
(1958-60) signed in April 1957. These negotiations are another ix-
dication that Moscow apparently desires to maintain normal economic
relations with Belgrade.
E. Latin America
1. Argentina
During the first half of 1960, Argentina continued ite
campaign to curb local Communist activities and to diminish the
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importance of its Bloc ties. Government moves to suppress Communist
propaganda and to Outlaw the Communist Party gained force as local
Communists sought to capitalize on Argentina's economic problems in
order to subvert the economic stabilization program. Local Communists,
in conjunction with the Peronistas, staged a ballot boycott in an at-
tempt to destroy the validity of the Argentine congressional elections.
In spite of the existence of diplomatic relations with the USSR and
five Satellites, cultural exchanges between the Bloc and Argentina
were minimal.
In a typical attempt to bolster the Bloc's weakening posi-
tion, high-level delegations from the USSR, Hungary, Poland, Czecho-
slovakia, Bulgaria, and Rumania attended the 25 May celebration of
the 150th anniversary of Argentine independence to which all countries
represented in Buenos Aires had been invited. Among the representa-
tives was Soviet First Deputy Premier Kosygin (who signed a new
protocol to the Argentine-Soviet credit agreement) and the Ministers
of Foreign Trade of Hungary and Poland. During the first half of 1960,
Argentina, as part of its general move toward multilateral trade, took
further steps to terminate its bilateral agreements with all Bloc coun-
tries except the USSR. Although the level of trade in 1960 should not
fall significantly below the 1959 level, this move and revisions in the
Soviet credit noted below seem calculated to diminish Soviet economic
penetration in Argentina.
In February, Argentina announced that $50 million of the
$100 million Soviet credit for development of the Argentine oil indus-
try would be diverted to other areas of the economy. This intention
was ratified by the signing of a protocol to the agreement when Kosygin
visited Argentina in May. According to the protocol, the $50 million
may be used for the purchase of road construction equipment, mining
equipment, and other machinery. With the $32 million previously com-
mitted to the purchase of oil industry equipment, the use to which
$82 million of the $100 million credit can be put has not been speci-
fied. The remaining $18 million has been kept in reserve for use by
the Argentine government-owned petroleum company YFF (Yacimientos
Petroli.feros Fiscales). As of 1 June, only $10.3 million worth of
petroleum equipment had been delivered to Argentina. According to a
YPF spokesman, four technicians at most may enter Argentina in con-
nection with the credit. Orders for Soviet. helicopters and for five
deep-well drilling rigs have been canceled or postponed, and some
dissatisfaction has been shown by YPF over the failure to get pipe
under the credit.
The purchase of 80 Hungarian railroad coaches and rail-
road machinery and equipment was announced in May. This transaction,
amounting to $11.2 million, was authorized in October 1959 and was
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made under deferred payment within the framework of the expy.l-.ng
Argentine-Hungarian payments agreement. Terms were not givens.
Argentine-Bloc trade in 1959 declined from the 95b level;
however, the Bloc's share of total trade remained at approximately
5 percent, the same as the year before. This over-all decline in
total Bloc trade may continue into 1960, but increased impor,s of
equipment under the $100 million Soviet credit together wit.:. the e' -
livery of Hungarian rail equipment could maintain the present .evEL.
On the other hand, Argentina's approach to self-sufficiency in of
production and its present moves toward cancellation of its cilateral
agreements will tend to discourage trade with the Bloc.
Bloc influence in Argentina appears to have weatcened n
the last 6 months. A concerted drive by the government to reduce
local Communist activities coupled with its economic reform measuaes
have brought about a less favorable atmosphere for Bloc activity.
2. Brazil
During the first half of 1960, Brazil was second only to
Cuba as a target for Bloc activity in Latin America. Especially
strong efforts were made to exploit Brazil's anxious search for new
markets and credits for its ambitious program of industrialzatio3
and economic development. Poland and Czechoslovakia, which presertly
have diplomatic relations with Brazil, sought to strengthen these
ties; and the USSR and the other Bloc countries made a sustained ef-
fort toward establishing diplomatic relations. Effective propaganda
was slanted toward the development program, emphasizing the economic
accomplishments of the Communist Bloc and its potential as a vast aev
market. In addition, the Bloc has continued to play on Brazil's en
sitive feelings of nationalism, especially their more extreme and
anti-American manifestations.
The tangible results of the Soviet trade offensive, a-
though significant, have been less impressive. By midyear, after
protracted negotiations, trade resulting from the much-vaunted Soiiet-
Brazilian trade agreement was only beginning. Some feeling:. of d-s-
illusionment began to appear in certain sectors of Brazilian opin-on,
helped no small amount by revelations of the defecting chief' of tie
resident Hungarian trade mission that Hungary was using comrsercia:_
representatives in Brazil as intelligence agents. Trade, however
continued at a generally accelerated pace in an atmosphere still
considered friendly.
Although no new long-term credits were extended to Br:Lzil
in the first half of 1960, several proposals were reported as penc_ing.
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According to the Sao Paulo press of April, Brazil was considering a
Polish offer to build a steel plant with an annual capacity of 150,000
to 250,000 tons at a cost of $30 million, to be repaid over an 8-year
period. A press report that the head of the Soviet trade mission
visiting Brazil in May had offered to study Brazilian proposals for
long-term Soviet investments at low interest rates in large projects
was later denied by the mission head and was probably a trial balloon
A Czechoslovak proposal to manufacture Zetor tractors in Brazil may
involve a credit offer. This proposal was endorsed by the Brazilian
government Automotive Industry Executive Group as one of ten projects
approved for implementation in the program to establish a national
farm tractor industry.
In January, three Soviet technicians arrived in Sao Paulo
for the reported purpose of assisting the private Companhia Industrial
de Boehas :Betuminosas (CIRB) in developing its Paraiba Valley oil
shale deposits in Sao Paulo State. After making preliminary surveys
and presenting their findings before the National Petroleum Council,
the group departed late in April with a 200-ton sample of Brazilian
shale to be further analyzed in the USSR. The project contemplated
by the company involves the conversion of shale into natural gas to
supply the Paraiba Valley and ultimately Sao Paulo and Rio de Janeiro.
Some doubt exists concerning the motive of the company in employing
the technicians and the seriousness of their interest in developing
the deposits. The technicians have not yet returned to Brazil, but
the press in Sao Paulo has reported that 20 Soviet engineers are com-
ing to Brazil in connection with this project.
According to Radio Warsaw, Polish technicians completed
their activities in connection with the completion of a caustic soda
plant in Cabo Frio and returned home, having been in Brazil from late
1959 to April 1960.
Brazilian-Bloc trade during 1959 was the highest in Bra-
zilian history, amounting to 4 percent of Brazil's total trade, com-
pared with 3 percent in 1958. Especially notable was the development
of significant trade with the USSR and East Germany, neither of which
traded on a regular basis with Brazil before 1958. The ranking Bloc
traders in Brazil, however, were still Czechoslovakia, Poland, and
Hungary.
During the first 6 months of 1960, Brazil signed new 5-
year trade agreements with Poland and Czechoslovakia. Both agree-
ments call for a yearly total trade turnover of $70 million and pro-
vide for the exchange of Brazilian coffee, cocoa beans, and other
agricultural products for Polish and Czechoslovak machinery and
capital. goods. If the quotas provided for are realized, trade be-
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between Brazil and both Poland and Czechoslovakia will increase sub-
stantially. The new agreements are the first long-term pa,---r,- signed
by Poland and Czechoslovakia with Brazil.
The first official Soviet mission to visit Brazil since
the severance of diplomatic relations in 1957 arrived in Rio de V-anei-
in May to discuss the implementation of the December 1959 Soviet-
Brazilian trade agreement. After a month of discussion, contracts
were signed for Brazilian imports of 150,000 tons of Soviet wheat
valued at $10.3 million, 100,000 tons of diesel oil valued ac
$2.3 million, and 600,000 tons of Soviet crude oil valued at $7.5
million; Brazil will export 11,800 tons of coffee valued at $8.24 mil-
lion. The amounts of petroleum products and wheat contracted are
those specified in the agreement. The USSR was given until June 961
to ship the petroleum, an extension of 6 months beyond the period
contemplated by the agreement. Problems apparently have arisen con-
cerning the specifications of the Soviet crude oil. The amounts fall
short of the $25 million each way specified in the trade agreement
and represent an $11.9 million import surplus for Brazil. In order
to fulfill the terms of the trade agreement, the USSR would have to
make additional 1960 purchases of 8,200 tons of coffee plus $9 mil-
lion worth of other Brazilian products, and Brazil would have to
purchase $5 million worth of machinery, chemicals, oil industry equip-
ment, and other products. No plans for further 1960 purchases have
been announced.
The propaganda image of vast Eastern European ma?ketv~
probably has been the most effective weapon employed by the Bloc in
its economic offensive in Brazil since it plays upon Brazil*c own
desires to open new markets for coffee and other products and to -get
commodities needed for development from non-hard-currency areas.
With the impetus of the new Polish, Czechoslovak, and Soviet trade
agreements, this image may gain substantive reinforcement in 1960.
The Bloc share could rise to as high as 10 percent of Brazil's 19b0
trade if the target increases with Poland, Czechoslovakia, and the
USSR take place. Various factors, however, may limit significantly
the long-run success of Bloc trade promotion efforts. First. the
commodity that Brazil is primarily interested in marketing, .-off?e,
has never been an important consumption item for Bloc countries. In
this connection it may be significant that the USSR failed t:; pur-
chase in 1960 even the relatively small quantity of coffee called for
by the trade agreement. Second, the high expectations of the Bra-
zilians probably will suffer a setback when it is discovered that
Bloc trade is no panacea for all economic ills. The small amount of
trade resulting from the Soviet agreements has already been the source
25X1
has a pei
to dampen some Brazilian enthusiasm for Bloc trade.
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In spite of the recent emergence of some difficulties,
Soviet Bloc prestige in Brazil over the last 6 months has on balance
been increasing. Continued efforts to raise the tempo of economic
relations by the renegotiation of agreements, the exchange of trade
missions, and other trade activities have served to keep the issue
before the eyes of the Brazilians. The signing of contracts under
the Soviet agreements and the negotiation of a new Czechoslovak
agreement should be sufficient to maintain a Brazilian attitude fa-
vorable to Bloc economic ties for the near future. The seeds of dis-
illusiion may have been planted, however, and, if so, the Soviet Bloc
may soon encounter decreased receptivity toward its future promotional
activities.
3. Cuba
During the first 6 months of 1960 the Bloc energetically
sought to identify itself closely with the Cuban revolution, and Cuba
assumed an increasing pro-Soviet orientation both in its foreign pol-
icy and in its internal affairs. As Cuba's relations with the United
States and the rest of the Western Hemisphere have deteriorated, this
desire on the part of both parties for closer relationships has mani-
fested itself on all levels of activity. Diplomatically, the period
found Cuba reestablishing relations with the USSR, Czechoslovakia,
and Poland and contemplating relations with other Bloc regimes, in-
cluding those of East Germany and Communist China. During this
period a greatly increased exchange of persons between the two areas
has been noted. Highlights included the arrival in Havana of the
Soviet scientific, technical, and cultural exhibition inaugurated by
Soviet First Deputy Premier Mikoyan, the arrival of the Peking Opera
Company, and the exchange of trade union, student, and other groups
between Cuba and the Bloc. In June, Soviet Premier Khrushchev an-
nounced acceptance of a Castro invitation to=visit Cuba in the near
future. The Cuban-sponsored Latin American news agency Prensa Latina
and the various Bloc agencies, including PAP, CTK, TASS, and NCNA have
exchanged news coverage and have increasingly followed a common line,
while Soviet and especially Chinese Communist news comment has fo-
cused upon the Cuban struggle against "Yankee imperialism." Recently
the Bloc has begun to use Havana as a base for its propaganda and sub-
versive efforts throughout Latin America.
In the first 7 months of 1960, in. response to Cuba's an-
nounced desire to expand its markets and diversify its imports, the
USSR, Poland, Czechoslovakia, East Germany, and Communist China all
signed trade or payments agreements with Cuba. In addition, the USSR
granted Cuba a $100 million credit, Czechoslovakia granted a $20 mil-
lion credit, Cuba and Communist China negotiated a technical assist-
ance and credit agreement, and numerous Bloc technicians began to
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appear in the country. Sugar sales to the Bloc in 1960 far exceered
those of any previous year.
In February 1960, in conjunction with a Soviet-Cuban ;radf
agreement, the USSR extended to Cuba a $100 million line of credit at
2.5 percent interest, repayable in 12 years. This first credit ti
Cuba extended by a Bloc nation is to be used for new plants and fps=r-
tories during the period 1961-65 and envisions extensive Soviet tech-
nical assistance. In June, Czechoslovakia granted to Cuba s, $20'nnil-
lion credit to be used for its industrial expansion program- It. s
a 10-year credit payable at 2.5 percent interest. East Germany a:id
Poland probably also have extended long-term credits to Cuba.
In June and early July a Cuban economic mission, headid
by the Executive Director of the National Institute of Agra f_an RF=form
(INRA), Nunez Jimenez, visited the USSR, Czechoslovakia, Poland, and
East Germany to discuss Bloc assistance in Cuba's industria:iizati-.on
program. Upon his return, Nunez stated that his mission hac.c.one-cadet.
agreements for the purchase of 32 complete factories, including 7 frot.
the USSR, 12 from Poland, 8 from Czechoslovakia, and 5 from East Ger-
many. Included in these factories are a 1-million-ton-capar ty steel
mill to be erected with Soviet assistance, two powerplants, two teexti:(?
mills, various metalworking plants, and miscellaneous light industrie,.
Nunez also announced that Bloc trade missions visiting Cuba in thf'
first 6 months of 1960 had agreed to furnish an additional 21+ complete
factories. Nunez stated that the cost of all 32 of the fac~,ories for
which his mission had negotiated was $84 million, of which 15 mi:_lioi
represented foreign exchange costs. Neither the domestic nor the for,
eign exchange costs of the other 24+ plants are known.
Recent reports of an increasing influx of Bloc vechnif^ian
seem plausible. Probably about 35 Soviet technicians, connected 14ith
surveys of Cuba's economy and potential development, were in Cuba by
the end of June. A team of Soviet specialists has completed a miiera
survey of Pinar del Rio province. Other teams have been reported as-
sisting the Cuban Petroleum Institute, and some probably are invoe_ved
in agricultural surveys in cooperation with INRA. Rumors of the pres-
ence of military advisers have persisted for some time, and some a'.loc
military personnel may be in Cuba. Some of the technicians repor-?:ed
may have been in Cuba since the Soviet exposition and the Mikoyan
visit in February, whereas others have arrived via Venezuela and
Curacao. Technicians from Czechoslovakia, East Germany, and 7ommunis
China may also be in Cuba. An increase in the number of Bloc per-
sonnel should result from the credit agreement signed with Czechor;lo-
vakia and from visits of the Nunez Jimenez and Raul Castro missions
to the Bloc.
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In the field of trade, Cuba's ties with the Bloc increased
rapidly during the last half of 1959 and the first half of 1960. Trade
for all of 1959 came to no more than about $20 million. However, dur-
ing the last few months of 1959, the Bloc and particularly the USSR,
made a number of large sugar purchases for both 1959 and 1960 delivery
that began to change dramatically the nature and extent of Cuba's trade
with the Bloc. By 13 February, the date of the new Soviet-Cuban trade
agreement, the USSR had agreed to purchase 1 million Spanish long tons*
of Cuban sugar for 1960 delivery. This amount was increased in mid-
July when the USSR agreed to purchase the 700,000 tons which the United
States dropped from its Cuban import quota. In addition, sugar pur-
chases of other Bloc countries for 1960 probably will come to between
500,000 and 700,000** tons. Thus total Bloc purchases for 1960 amount
to approximately 2.4 million tons with a total value of nearly $160
million. The maximum value of Bloc purchases in the past was $42 mil-
lion in 1957.
Not all of the Bloc purchases will represent increased
exports for Cuba. Cuban sugar exports are regulated by quotas estab-
lished under the International Sugar Agreement, and therefore exports
cannot be increased unless the quotas are enlarged. The International
Sugar Council, which administers the Sugar Agreement, has increased
the Cuban. quota by about 630,000 tons since.the first of the year and
has also permitted Cuba to sell 700,000 tons to the USSR outside the
regular quota. Thus, in effect, Cuba has had a total increase of
1.3 million tons in the size of its quota. This sum is more than a
million tons short of its total commitments to export to the Bloc in
1960, and. this amount has been diverted from Western markets.
Both the USSR and Communist China, in addition to the
large purchase for delivery in 1960, have also made commitments for
future sugar purchases. The trade agreement between Cuba and the USSR
signed in February calls for the USSR to buy 1 million tons annually
from 1961. to 1964. The trade agreement signed with Communist China on
23 July provides that China will purchase 500,000 tons annually over
a 5-year period. The Soviet agreement provides that 20 percent of the
sugar purchases will be paid for in hard currency, with the remainder
paid by the delivery of Soviet commodities. The Chinese agreement has
a similar provision covering sales during the first year with sales in
subsequent years made on a strictly barter basis. Thus the two agree-
ments indicate not only that large quantities of Cuban sugar will be
exported to the Bloc during the next 5 years but also that Cuba will
* The Spanish long ton is the conventional unit of measure used in
the international sugar market and is equal to 2,271.6 US pounds.
** The exact total of all Bloc purchases has not been determined,
because it is not clear exactly how much sugar will be exported to
Communist China under the 23 July agreement.
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necessarily be required to import substantial amounts from both tie
USSR and Communist China.
Implementation of the Soviet treaty began almost im-
mediately. Shipments of sugar to the USSR moved steadily t*irough
the first half of the year, and imports from the USSR also began n
substantial amounts. Cuba has contracted for at least 900,000 metric
tons of Soviet crude oil at a price of $2.75 per barrel. This $l1'.3
million transaction will absorb 58.6 percent of the value of the
1+25,000 Spanish long tons of sugar that Cuba sold to the USSR under
the February agreement and is equivalent to Cuba's oil needs for _00
days. As the small government-owned refinery does not have the c3.pac-
ity to handle this amount of oil, it asked each of the three foreign
oil companies to handle 300,000 tons of Soviet crude oil in their re-
fineries. Their refusal lead to "intervention" by the Cuban Gove-n-
ment of one major refinery by the end of June and of the remainiz3
two in early July. After the government took over operating control
of the foreign refineries, Cuba's normal petroleum imports From W,ste.,
sources came to a complete halt. Following the rupture of normal oil
supplies, it seems probable that Cuba concluded additional petroleum
purchases from the USSR. Besides petroleum, Cuba is importing fer-
tilizer from the USSR in substantial quantities and has also contr..act,
for the delivery of 20,000 metric tons of Soviet wheat.
Other trade agreements with the Bloc are less exclensire
than either the Soviet or Chinese Communist accords. In March an
East German trade mission signed a 1-year interbank payments agre-
ment with Cuba. Also in March a trade and payments agreement waw
signed with Poland that is very general in nature and is little aDre
than a framework or preliminary agreement. Neither the East German
nor the Polish agreement established specific trade goals but ratier
makes general provisions for the exchange of Cuban sugar and other
agricultural products for machinery and industrial installations. In
June, Czechoslovakia also signed a trade and payments agreement c,' un-
specified amount with Cuba. Implementation of these agreements h3.s
gone forward rapidly as East Germany contracted for 60,000 Spanis3 lo?-
tons of sugar and Poland agreed to take 150,000 tons. (Some of these
sales, however, may not have taken place within the framework of he
trade agreements.) Some imports also have been received from all
three of these Bloc countries.
Official Cuban statistics on trade with the Bloc. as tell
as with the rest of the world, have been virtually nonexistent si3.ce
early 1959. Based on known shipments of sugar to the Bloc and on oth-~r
exports known to have been made, Cuba's total Bloc exports in 195)
approximately $16.5 million, compared with exports to the Bloc of
$17.7 million in 1958, and represent approximately 2.5 perco.ont of
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Cuba's total exports in 1958, the last year-for which complete sta-
tistics are available. No figures are available concerning Cuba's
total trade or its import pattern in 1959, although goods valued at
$700,oOo were shipped from the Bloc in the first 6 months. It is
probable that imports from the Bloc were not significantly larger in
1959 than the $2 million level of past years.
The Bloc's influence in Cuban economic affairs, like that
in other fields, has grown sharply in the last 6 months. With the
impact of the new trade and credit agreements only beginning to be
felt, this influence should increase even further during the year as
economic deterioration in Cuba and worsening relations with the United
States make Cuba more dependent on foreign economic aid.
4. Uruguay
In spite of the existence of extensive diplomatic and
trade relations between Uruguay and the Bloc and Uruguay's continued
economic problems, Bloc influence in Uruguayan domestic affairs has,
if anything, diminished. The five Bloc diplomatic missions in Monte-
video (Soviet, Czechoslovak, Polish, Rumanian, and Bulgarian) and the
two resident commercial missions (Hungarian and East German) have lent
encouragement to the formation of a Communist-dominated central trade
union movement and have indicated their opposition to economic reform
moves which the Uruguayan Government has undertaken with US support.
A severe trade imbalance and the adverse effect on prices of currency
devaluation have increased economic discontent in Uruguay, but Bloc
efforts to capitalize on these difficulties have not been particularly
successful. The Uruguayan Government's failure to accept a Soviet
offer to buy for cash $25 million worth of wool in return for $16.5 mil-
lion worth of oil on short-term credit has caused the USSR to withdraw
from the Uruguayan wool market, thus considerably decreasing Uruguay's
trade with the Bloc in the first half of 1960.
Direct trade with the Bloc in 1959 equaled $40.8 million,
approximately 16 percent of Uruguay's total trade. Direct exports to
the Bloc dropped from $29.4 million in 1958 to $27.4 million in 1959,
a decline which was in line with the almost complete paralysis of
Uruguayan wool exports in the last 3 months of 1959. In spite of this
decline, exports to the Bloc represented 28 percent of total 1959 ex-
ports, including 43.4 percent of the chief export commodity, wool. In
1958 the Bloc took 21 percent of direct exports. Imports from the
Bloc rose to 9 percent of total imports, compared with 5 percent in
1958. This advance was achieved chiefly at the expense of Western
Europe.
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Preliminary statistics for the first 4 months of 19& in-
dicate a sizable drop in Soviet Bloc trade. In that period the i~loe
accounted for 11 percent of total Uruguayan exports and for 2 percent,
of its imports. During this per`od, Communist China purchased .6 sd
lion of wool tops, the largest amount for any Bloc country and aaaproi
mately equal to Communist China's total 1959 purchases from Urugay.
Sales to the USSR were less than $100,000.
A November 1959 Soviet offer to purchase $25 million wort1
of wool from the 1959/60 clip if Uruguay purchased petroleum valt.ed s1
$16.5 million was not acted upon by the Uruguayan Government. AL a
result, the USSR, which in 1959 was the largest purchaser of Urufaaye.r
wool, refrained from entering the 1959/60 wool market. This witt dram
exacerbated the partial paralysis in the market, so that by the + nd of
April 1960 only 4+6 percent of the current wool clip had beer, expr rtes
compared with 62 percent at the same time in 1959. In May 1`360 the Ii?
made a new offer to buy for cash $75 million worth of wool ^ver s 3-
year period if Uruguay purchased $50 million of petroleum products,
paying for shipments on terms of 270 to 360 days credit. In add Lion,
the USSR proposed the immediate purchase for convertible currency of
low-grade wool valued at $13 million. Since the bulk of the unsold
Uruguayan wool is of this quality, the offer is particularly attiao ti;a:
to many Uruguayans. The government, however, has not made any dccisiat
about this new offer. If it is not accepted, then the Soviet absence
from the Uruguayan wool market probably would continue. Otier BI-)c
countries have continued to purchase Uruguayan wool, although tot~Ll B
purchases from the 1959/60 wool clip through April amount to only 15:
percent of Uruguay's wool exports. The USSR may have again entered
the Uruguayan market through indirect purchases, as the Netherlanis,
the major transshipment point for this product, remains a sizable pur-
chaser.
A continuing economic crisis in Uruguay, a weakening if
prices in Western markets for the lower grade wool, and internal rac-
tors leading to Uruguayan unwillingness to sell wool at current w-)rld
market prices combine to make the Soviet offers attractive to mat.
Uruguayans. An apparent government desire to avoid accepting the Sov_t
proposals, however, appears to diminish short-term Uruguayan-Bloc trait
prospects. The tendency of Uruguay to seek short-term expedients in
place of the long-term solutions has helped the Soviet Bloc to ice!p on
foot in the door.
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STATISTICAL APPENDIX
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Bloc Credits and Grants to Underdeveloped Countries
Extended, Obligated, and Drawn
January 1954 - June 1960
Recipient
Co:.ntry
Iota.l
USSR
European
Satellites
^ -tal
European
Iateilite=
Comnist
China
Total
4,053.8
3,045.6
Middle East
1,912.6
1,508.7
1,724.6
1,362.7
5.1
Afvhnist
25 -1
241.9
13.8
0
246.6
233.4
13.2
0
0.l
0
6.1
2
5
Iraq
300.5
300.5
0
0
163.0
163.0
.
118.0
Pakistan
3.2
3.2
0
0
3.2
3.2
3.2
wksx
17.11
R.k;
7.5
a
37.1
9.6
7,g
0
19
UAB -- Egypt
565.6
585.6
275.3
4.7
928.5
685.6
-33.2
4.7
2
405
UAR -- Syria
304.3
242.2
62.1
0
304.3
242.2
62.1
C
.
178
6
Yemen
60.7
25.7
18.0
17.0
56.0
25.7
18.0
12.3
.
28.0
Africa
159.8
137.0
21.3
1.5
4
89
0
79
3
9
1
.
.
.
.5
6.2
Ethiopia
113.6
101.8
11.8
0
48.2
43.8
4.4
0
3
3
Ghana
3.1
0
3.1
0
3.1
0
3.1
0
.
0
Guinea
43.1
35.2
6.4
1.5
38.1
35.2
1.4
1.5
2.4
Asia
1,638.5
1,123.9
378.3
136.3
1
275
5
4
859
8
4
4
Burma
12.0
12.1,
0
0
,
.
12.3
.
12.0
33
.1
0
LL- _
0
74.5.5
11
0
Cambodia
34.7
6.0
0.7
28.0
29.1
6.0
0.7
22.4
.
23.7
Ceylon
58.0
30.0
1.7
26.3
27.4
23.3
1.7
2.4
4
6
India
807.7
684.2
123.5
0
777.7
684.2
93.5
0
.
9
150
Indonesia
685.0
384.2
252.4
48.4
417.6
126.4
242.8
46.4
.
280.1
Nepal
41.1
7.5
0
33.6
11.7
7.5
0
4.2
4.2
Europe
1157
76.0
_.9.7
Iceland
4.6
3.1
1.5
4.6
~.1
1.-
i.. j
Ya sonla~is
~YY:i
?2:9
?a:2
Latin America 227.2 200.0
Argentina 103.7 100.9
Rrwvri # .~ -a ..
~uua 123.3 mow.
c
0
European Cor.~uriat
sacei1ites China
0
118.0
3.2
1A
174.6
116.7
5.7
2.2
2.0
0
0.2
11.'
2.5
0
0
0
0
0
225.9
4.7
61.9
0
18.0
4.3
3.2
0_8
1.8
0
0
0
1.4
0.8
196.7
204.8
73.0
11.0
0
0
5.0
0.7
18.0
0.5
1.7
2.4
139.3
11.6
0
40.9
190.8
48.4
0 0 4.2
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Bloc Economic and Military Credits and 'ur.n,--
Extended to Underdeveloped Countries
by Recipient Area and Country
January 1954 - June 1960
Million Current US $
Area and Country
Total
Economic
Total
4, 053.8
3,231.3
822.5
Middle East
1,912.6
1,296.5
616.1
Afghanistan
255.1
216.7
38.4
Iran
6.1
6.1
0
Iraq
300.5
182.5
118.0
Pakistan
3.2
3.2
0
Turkey
17.1
17.1
0
UAR -- Egypt
965.6
650.6
315.0
UAP -- Syria
304.3
176.6
X7.7
Yemen
60.7
43.7
17.0
Africa
159.8
159.3
0.5
Ethiopia
113.6
113.6
0
Ghana
3.1
3.1
0
Guinea
43.1
42.6
0.5
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Table 9
(Continued)
Million Current US
Area and Country
1,638.5 1,432.6
Military
205.9
Burma
12.0
12.0
0
Cambodia
34.7
34.7
0
Ceylon
58.0
58. C
0
India
807.7
807.7
0
Indonesia
685.0
479.1
205.9
Nepal
41.1
41.1
0
115.7
115.7
Iceland
4.6
4.6
0
Yugoslavia
111.1
111.1
0
227.2
227.2
Argentina
103.7
103.7
0
Brazil
3.5
3.5
0
Cuba
120.0
126.0
0
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Eio^ Ecnomi7 and Military Credits and Grants to Underdeveloped Countries
Extended and Drawn. by Year
January 1954 - June 1960
Million Current US
Extensions
Drawings
Year
Total
Economic
Military T
otal
Economic
Military
Total
;, :53 .
3, 231.3
822.5 1
462.2
653.1
809.1
1960 (Jan-Jun)
785.7
785.7
0
135.1
89.0
46.1
1959
901.0
889.0
12.0
409.7
167.8
241.9
1958
1,017.1
561.7
455.4
373.0
204.6
168.4
1957
279.8
226.8
53.0
166.2
81.2
85.0
1956
710.1
608.0
1
102.1
364.9
107.2
257.7
1955
349.3
149.3
200.0
13.3
3.3
10.0
1954
lo.8
10.8
0
0
0
0
a. Excluding about $350 million in credit extended to Yugoslavia and subsequently
either canceled or allowed to expire.
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Terms of Major Soviet Lines of Credit Extended to Underdeveloped Countries
January 1954 - June 1960
Recipient Country
Date
Established
Currency Unit
in Which
Denominated
India
Feb 1955
Rupee
Afghanistan
Iso 1.956
US dollar
India
Nov 1956)
Rupee
JAR -- Syria
Oct 1957
Ruble
JAR -- Egypt
Jan 1958
Ruble
Argentina
Oct 1958
US dollar
UAR -- Egypt
Dec 1958
Ruble
India
Jul 1959
Ruble
Ruble
Ethiopia
Jul 1959
Ruble
Indonesia
Feb 1960
US dollar
UAR -- Egypt
Feb 1960
Ruble
Definition of
Currency Unit
in Which
Denominated
0.186621 grams of
gold ner rupee
Unknown
Unknown
0.222168 grams of
gold per ruble
0.222168 grams of
ro18 per ruble
$35 per ounce of
gold
0.222168
grges of
gold per ruble
0.222168 grams of
gold per ruble
0.222168 grams of
gold per ruble
Unknown
Not defined
0.222168 grams of
gold per ruble
Value
(Million
Current
us
Date
Drawing Began
Date Line of
Credit Expires
Interest
Rate
(Percent)
Amortization Period
115.5
Jan-Jun 1956
Not specified
2.5
12 pears begirning_ year
100.0
Mar 1956
Unknown
2.0
after dra-.:ing
22 years beginning 8 years
126.3
Jun-Dec 1959
Unknown
2.5
after drawing
12 years beginning 1 year
150.0
Apr 1958
Oct 1964
2.5
after dra-.ing
12 years
175.0
May-Nov 1958
Jan 1962
100.0
Dec 1959
Oct 1961
2.5
10 years
100.0
Mar-Jun 1959
Not specified
2.5
12 years beginning in
1964
137.5
None to date
Not specified
2.5
12 years beginning 1 year
100.0
Jun 1960
Jul 1969
2.5
after drawing
17 years, but flexible
250.0
None to date
Jul 1967
2.5
12 years beginning 1 year
287.0
None to date
Not specified
2.5
after drawing
12 years beginning 1 year
after completion of con-
Feb _ 0 f1. da it e1. ~. 66$ ro Rr a nY 11.1.
goad per dollar
except ner-
haps
technicians
Form of Repayment
Good_ or oonvertib:e currency
Goods
:,tee _erabie pounds
st rling, or other convert-
ible currency agreed on
Goads or convertible ourreaev
Goods and/or convertible
currency
(Bottom, agricultural oammodi-
ties, and/or convertible
currency
US dollars credited to the
Soviet account with the
Argentine Central Bank
Egyptian pounds credited to
the Soviet account with the
Central Bank of the UAR for
the purchase of Egyptian
goals
Convertible Iraqi dinars
credited to the Soviet ac-
count sith the Central Bank
of Iraq
Goods or convertible currency
Goods or convertible currency
Goods, pounds sterling, or
other convertible currency
Fgyptian pounds credited to
the Soviet account with the
Central Bank of the UAF for
the purchase of rgyptiar.
m n.d
the U:S etc be oet in dol..
Lars.
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Table 12
Bloc Economic Technicians in Underdeveloped Countries J
January-June 1960
Total
European ,
Communist
tr
d C
Bloc
USSR
Satellites b/
China
y
oun
Area an
-
Total
5,68o
3,69o
12020
970
Middle East
3,795
2,415,
680
700
Afghani:>tan
1,140
1,025
115
0
Iran
30
5
25
0
Iraq
425
295
130
0
Pakistan
5
0
5
0
Turkey
105
15
90
0
UAR Egypt
485
375
110
0
lAR -- Syria
475
300
175
0
Yemen
1,130
400
30
700 J
Africa
195
50
80
65
Ethiopia
25
20
5
0
Ghana
5
5
,
Guinea
165
25
75
65
0
Libya
0
Moree.cco
0
0
Asia
1.,565
1,175
185
205
Burma
50
45
5
0
Cambodia
210
20
J
190
Ceylon
40
10
30
0
India
1,100
1,000
100
0
Indonesia
125
75
50
0
Nepal
40
25
0
15
Latin Am rica
115
1F0
75
0
Argentina
45
0
45
0
Brazil
25
5
20
0
Chile
5
0
5
0
Cuba
40
35
5
0
Europ,,
10
0
0
Yuge sla via
10
10
C)
0
a. Minimum estimates of personnel present for a period of 1 month or more. Personnel
engaged -solely in commercial or military activities are excluded. Numbers are rounded
to the nearest five.
b. Including Bulgaria, Czechoslovakia, East Germany, Hungary, Poland, and Rumania.
c. Including technicians and laborers.
d. A few specialists are believed to have been present. They are not included in sub-
totals or the total.
-84-
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Military Personnel from Underdeveloped Countries Trained in the Bloc J
January 1955 - June 1960
Country Sending Trainees
Total Bloc
USSR
European Satellites
4,220
1,715
2,505
Afghanistan
520
520
0
Guinea
60
40
20
Indonesia
1,510
10
1,500
Iraq
280
235
45
UAR -- Egypt
1,325
515
81o
UAR -- Syria
525
395
130
a. Numbers are rounded to the nearest five.
b. Including Poland, Czechoslovakia, Bulgaria, and East Germany.
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Table 14
Academic Students from Underdeveloped Countries Trained
January 195b - June 1960
Area and Country
Total Bloc
USSR
European Satellites
Communist China
Total
2,770
1,415
1,250
l~.
Middle East
1,635
980
bj>
20
Afghanistan
25
15
10
0
Greece
30
0
30
0
Iraq
610
400
190
20
UAR
925
530
395
0
Yemen
45
35
10
0
Africa
170
280
0
Ethiopia
15
5
10
0
Ghana
65
15
50
0
Guinea
180
100
80
0
Sudan
190
50
140
0
-86-
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Table 14
(Continued)
Area and Country
Total Bloc
USSR
European Satellites
Communist China
540
245
210
Burma
40
30
10
0
Ceylon
15
5
10
C
India
115
50
60
5
Indonesia
355
150
130
75
Other
15
10
0
5
Latin America
145
20
125
0
Bolivia
50
0
50
Chile
10
0
10
Colombia
30
0
30
Mexico
25
0
25
Other
30
20
10
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Table 15
e the _ _
Technical S tudeniN from s i'Underdeveloped Countries Tra n_d - the B_%
January 1956 - June 19611
.Area and Country
Total Bloc
USSR
European Satellites
Communist China
Total
2 3
1,405
250
Middle East
1, u5
75
Afghanistan
45
40
5
0
Iran
5
0
5
0
Iraq
365
195
170
0
Turkey
50
50
0
0
UAR
575
100
475
0
Yemen
75
0
0
75
Asia
1,265
1,020
70
175
Cambodia
175
0
0
175
India
1,050
1,005
45
0
Indonesia
25
0
25
0
Nepal
15
15
0
0
Latin America
10
0
10
0
0
0
a. Numbers are rounded to the nearest five.
b. Including Czechoslovakia, East Germany, Poland, Hungary, and Rumania.
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Table 16
Bloc Trade with Selected Underdeveloped Countries a/
195+-59
Million Current US $
Total Trade
Europe
Middle East and Africa
Asia
Latin America
Year
Total
Exports
Imports
Total
Exports
Imports
Total
Exports
Imports
Total
Exports
Imports
Total
Exports
Im
orts
p
1954
870
402
468
43
18
25
367
?60
207
206
113
93
254
112
143
1955
1,242
584
658
109
52
57
513
240
273
285
138
146
335
153
182
1956
186
799
'697
233
-35
-03
571
279.
299
434
245
i69
2+i)
130
lu 9
1957
1,794
677
917
316
180
135
820
390
429
464
235
229
195
71
124
1958
2,237
1,174
1,063
409
243
166
958
495
463
602
327
275
268
108
160
19,59
2,266
1,085
1,181
421
226
198
873
451
422
684
282
403
285
127
158
1958
Jan-Jun
1,033
539
494
194
123
71
467
222
245
242
143
99
131
51
79
Jul-Dec
1,204
635
569
215
120
94
492
274
218
360
184
176
138
57
81
Jan-Jun
1,082
540
543
197
113
84
440
210
231
304
138
167
140
79
61
Jul-Dec
1,184
546
639
226
112
114
433
241
192
380
144
236
145
48
97
a. All values have been rounded to the nearest million. Totals are derived from unrounded data and may not agree with the sums of
the rounded components.
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Bloc Exports to Selected Underdeveloped Countries /*
1958 and 1959
Million Current US $
Total Bloc
USSR
European Satellites
Communist China 1
Area and Country
1958
1959
1958
1959 c
t'
1958
1959 `_'l
1958
1959 _/
Total
1,173.9
1,085.2
382.9
..
342.9
555.6
524.1
235.4
Middle East
455.6
399.8
170.2
163.0
246.6
202.9
38.9
33.9
Afghanistan
27.3
32.5
23.0
28.0
3.8
4.0
0.5
0.5
Greece
39.7
42.2
14.3
16.o
25.4
25.9
0.1
0.3
Iran
37.7
36.6
26.3
22.5
11.5
14.1
--
Iraq
6.0
18.2
J
4.0
5.8
10.7
0.2
3.5
Israel
7.8
6.2
0.6
0.3
7.2
5.8
d/
Jordan
7.5
2.5
0.2
--
6.9
2.5
0.4
K mit
5.5
--
1.1
--
3.3
--
1.1
Lebanon
6.5
7.8
1.2
1.6
5.3
6.3
Pakistan
16.1
7.9
2.0
0.8
3.7
2.9
10.3
4.2
Turkey
57.3
42.4
6.9
6.6
50.3
35.8
--
--
UAR -- Egypt
219.5
183.6
90.9
77.1
103.5
82.6
25.1
23.9
UAR -- Syria
24.7
19.9
3.7
6.1
19.9
12.3
1.2
1.5
* Footnotes for Table 17 follow on p. 93-
- 90 -
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Table 17
Bloc Exports to Selected Underdeveloped Countries a/
1958 and 1959
(Continued)
Million Current US
Total Bloc
USSR
European Satellites Communist China
Area and Country
1958
1959
1958
1959
1958
1959
1958
1959
Africa
39.6
51.2
2.3
.44
18.6
29.7
18.7
14.2
Ghana
6.8
10.2
1
6.1
8.0
0.7
2.2
Guinea
--
9.0
1.0
--
8.o
--
--
Morocco
22.2
15.4
1.2
2.5
5.0
4.9
16.0
8.0
Sudan
8.0
12.4
0.5
2.9
5.9
7.0
1.5
2.6
Tunisia
2.6
4.2
0.6
1.0
1.6
1.8
0.5
1.4
Asia
327.3
281.6
108.4
62.7
45.1
53.7 '
173.8
2
165
.
Burma
31.3
25.4
4.1
3.9
10.6
5.1
16.6
16.4
Cambodia
5.4
6.2
0.2
1.1
0.4
0.8
4.7
4.3
Ceylon
33.8
36.4
0.2
0.5
1.8
4.4
31.9
31.5
India
137.4
97.0
100.9
53.1
23.0
31.2
13.5
12.8
Indonesia
47.3
57.7
1.5
2.7
2.9
5.8
43.0
49.1
Laos
0.2
--
--
d/
0.2
--
0.3
0./
4.
Ph: ippines
--
J
Thailand
3.1
3.1
1.2
0.7
1.9
2.4
I
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Bloc Exports to Selected Underdeveloped Countries J
1958 and 1959
(Continued)
Million Current US $
Total Bloc
USSR
European Satellites
Communist China b
Area and Country
1958
1959
Cj'
1958
1959 2/
1958
1959
1958
195;L
Europe
243.1
-
225.5
77.6
79.7
163.5
142.6
2.0
3.2
Iceland
27.7
29.1
15.0
15.2
12.7
13.8
J
i/
Portugal
3.2
4.7
0.8
1.7
2.2
2.8
0.2
0.2
Spain
17.1
19.5
4.0
5.1
12.7
13.9
0.3
0.4
Yugoslavia
195.1
172.3
57.8
57.6
135.9
112.1
1.4
2.6
Latin America
108.3
127.0
24.4
30.1
81.8
95.2
2.0
1.6
Argentina
55.8
49.1
17.9
21.9
38.0
27.2
Brazil
29.0
49.3
--
1.3
29.0
41.9
J~
0.1
Chile
2.3
1.1
0.1
--
0.8
0.4
1.4
0.7
Colombia
1.0
2.6
--
1.0
2.5
--
0.1
Cuba
2.0
1.4
J
2.0
1.4
Ecuador
0.1
--
--
--
0.1
--
--
--
Mexico
2.3
2.4
0.4
0.5
1.6
1.5
0.3
0.5
Paraguay
Peru
0.9
0.8
1/
0.9
0.8
d
Uruguay
10.3
13.4
6.0
6.4
4.3
7.0
Venezuela
4.5
6.8
0.1
V
4.3
6.5
0.2
0.3
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Bloc Exports to Selected Underdeveloped Countries of
1958 and 1959
(Continued)
a. These data are based on official trade statistics of the Free World countries involved with the
exception of Afghanistan, Burma, India, Thailand, and Uruguay) -- that is, the Bloc exports indicated
are the Free World trading partners' reported imports. All values have been rounded to the nearest
$100,000. A dash (--) entry indicates that no figure for trade is known, although some trade may have
taken place. Totals are derived from unrounded data and may not agree with the sums of the rounded
components.
b. The figures for Communist China include the following exports:
Current US$
From North Vietnam From Mongolia From North Korea
Country 1958
1959
1959 1959
Yugoslavia 0.1 million
India 2.4 million Less than 50,000 1.1 million
Indonesia 1.2 million
Cambodia and Laos Less than 50,000 Less than 50,000 Less than 50,000
UAR -- Egypt 0.1 million 0.1 million
c. Trade figures for January December 1959 are at a 12-month rate for the following: Venezuela for
January-May,; :ran, Lebanc, and Chile fcr Januar ..JurrnE; and Jean far yanaary-Se ;tem`,)c .
d. Less than $50,000.
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Table 18
Bloc Imports from Selected Underdeveloped Countries a*
1958 and 1959
Million Current US $
Total Bloc
USSR
European Satellites
Communist China J
Area and Country
1958
1959
1958
1959
1958
1959
1958
1959
1,063.2
1,181.3
385.8
465.0
493.6
529.3
i84.o
186.7
436.2
377.7
177.1
135.3
209.4
203.4
49.8
38.9
Afghanistan
16.2
20.0
13.0
16.0
2.7
3.5
0.5
0.5
Greece
37.6
33.6
16.8
11.8
20.8
21.8
0.1
Iran
30.8
17.4
25.5
10.7
5.3
6.7
--
Iraq
6.1-1
2.5
1.7
1.9
Israel
6.7
5.2
0.1
6.7
5.1
Jordan
0.9
0.9
--
--
0.9
0.9
--
--
Lebanon
2.5
0.7
1.4
0.2
1.1
0.5
--
--
Pakistan
21.2
10.9
6.6
3.5
7.1
6.7
7.6
0.7
Turkey
62.6
41.0
13.1
4.8
49.5
36.2
--
--
UAR -- Egypt
220.8
229.6
82.1
81.4
103.8
112.5
34.9
35.7
UAR -- Syria
36.9
12.3
18.6
4.3
11.5
7.8
6.7
0.1
* Footnotes for Table 18 follow on p. 97.
- 94 -
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 Approved For Release 2006/09/06: CIA-RDP92BO109OR000400010010-2
Table 18
Bloc Imports from Selected Underdeveloped Countries a
1958 and 1959
(Continued)
Million Current US
Total Bloc
USSR
European Satellites Communist China
Area and Country
1958
1959 c/
1958
1959 c
1958
1959 c
1958
1959
Africa
26.9
44.7
3.3
12.6
18.4
21.7
5.2
10.2
Ghana
1.1
6.2
1.1
5.5
d
0.7
--
--
Guinea
5.2
--
0.5
--
4.7
--
--
Morocco
13.9
14.5
1.5
1.3
9.3
6.6
3.1
6.5
Sudan
9.1
14.1
1
4.3
7.0
6.8
2.1
2.9
Tunisia
2.8
4.7
0.7
1.0
2.1
2.9
--
0.8
Asia
274.7
402.8
108.0
204..5
55.1
68.6
111.5
129.7
Burma
8.8
3.0
1.0
5.8
1.6
3.0
0.4
Cambodia
0.2
2.5
--
--
0.2
1.1
--
1.4
Ceylon
21.5
23.7
4.2
6.4
1.0
0.9
16.3
16.4
India
71.0
110.4
49.0
63.7
14.3
28.0
7.7
18.7
Indonesia
54.1
72.3
10.0
15.5
0.7
3.7
43.4
53.1
Laos
--
--
--
--
--
--
--
--
Malaya
y15.
X36.
44.8
115. 8
33.--
Philippines
h
- 3.2
- 2.4
--
--
2.1
--
0.1
--
0.
--
3.1
-`
0
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 Approved For Release 2006/09/06: CIA-RDP92BO109OR000400010010-2
Table 18
Imports from Selected. Underdeveloped Countries
1958 and 1959
(Continued)
Million Current US $
Total Bloc USSR European Satellites Communist China
Area and Country 1958
1959 JZ
1958
1959
1958
1959 2
1958
1959
Europe
165.5
198.4
49.7
64.9
110.8
130.3
5.0
3.2
Iceland
22.9
21.9
10.8
11.9
12.1
10.0
--
--
Portugal
5.2
6.7
1.9
1.6
3.1
4.5
0.2
0.6
Spain
10.1
21.0
0.7
4.2
9.2
15.7
0.2
1.1
Yugoslavia
127.3
148.8
36.3
47.2
86.4
100.1
4.6
1.5
160.0
157.7
47.7
47.7
99.9
105.3
12.5
4.7
Argentina
63.6
54.1
15.5
19.3
48.0
34.5
0.1
0.4
Brazil
45.8
55.3
--
3.7
38.3
51.6
7.5
d'
Chile
0.3
--
--
--
0.3
--
--
--
Colombia
1.9
2.7
1.8
--
0.1
2.7
--
--
Cuba
17.7
16.5
14.1
16.3
0.1
3.6
0.1
Ecuador
0.2
--
--
--
0.2
--
--
--
Mexico
0.6
1.6
0.3
d
0.3
1.5
Paraguay
Peru
0.6
0.1
0.1
0.6
0.1
-
Uruguay
29.4
27.4
16.3
8.4
12.1
16.2
1.0
2.8
Venezuela
- 96 -
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Bloc Imports from Selected Underdeveloped Countries
1958 and 1959
(Continued)
a. These data are based on official trade statistics of the Free World countries involved with the
exception of Afghanistan, Burma, India, Thailand, and. Uruguay) -- that is, the Bloc imports indicated
are the Free World trading partners' reported exports. All values have been rounded to the nearest
$100,000. A dash (--) entry indicates that no figure for trade is known, although some trade may have
taken place. Totals are derived from unrounded data and may not agree with the sums of the rounded
components.
b. The figures for Communist China include the following imports:
Current US $
To North Vietnam To Mongolia To North Korea
Origin 1958 1959 1959 1959
Yugoslavia 100,000
India 500, 000 600,000 400, 000
UAR -- Egypt 300,000
c. Trade figures for January-December 1959 are at a 12-month rate for the following:
for January-June, Cuba for January-August, and. Jordan for January-September.
d, Less than $50,000.
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Number oI 'Trade and Pa;-men ,6 r r e e i a e .itia Let,r:ee : B __..
December 1958 - June 196
Estimated Number as of
30 June 1960
Increase over
Estimated
Estimated
Estimated
Area and Country
Number
Number as of
31 December 1959
Number as of
31 December 1959
Number as of
30 June 1959
Number as of
31 December 1958
l
196
0
b/
186 b/
174 bf
Tota
Middle East
73
-2
75
71
66
Afghanistan
4
0
4
4
4
Greece
7
0
7
7
7
Iran
4
0
4
4
4
Iraq
11
0
11
8
3
Israel
4
0
4
4
4
Lebanon
6
-2
8
7
7
Pakistan
4
0
4
4
4
Turkey
7
0
7
7
7
UAR -- Egypt
11
0
11
11
11
UAR -- Syria
9
0
9
9
9
Yemen
6
0
6
6
6
* Footnotes for Table 19 follow on p. 100.
- 98 -
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Table 19
Number of Trade and Payments Agreements Between Bloc and Underdeveloped Countries a/
December 1958 - June 1960
(Continued)
Estimated Number as of
30 June 1960
Area and Country
Number
Number as of
31 December 1959
Estimated
Number as of
31 December 1959
Estimate?
Number as of
30 June 1959
Estimated.
Number as of
31 December 1958
Africa
28
+1
27
26
22
Ethiopia
2
0
2
1
1
Guinea
5
0
5
5
2
Morocco
7
0
7
7
7
Sudan
7
0
7
7
6
Tunisia
7
+1
6
6
6
Asia
40
-2
42
41
39
Burma
8
-1
9
8
8
Cambodia
5
0
5
5
5
Ceylon
7
0
7
7
7
India
10
-1
11
11
10
Indonesia
10
0
10
10
9
Nepal
0
02
02,/
0C/
6
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Number of Trade and Payments Agreements Between Bloc an d-3 Underdeveloped _'O" tries
December 1958 - June 1960
(Continued)
Estimated Number as of
30 June 196o
Area and Country
Number
Increase over
Number as of
31 December 1959
Estimated
Number as of
31 December 1959
Estimated
Number as of
30 June 1959
Estimated
Number as of
31 December 1958
Europe
26
0
26
22
25
Iceland
6
0
6
6
6
Portugal
if
0
if
if
if
Spain
6
0
6
5
5
Yugoslavia
10
0
10
10
10
Latin America
29
26
23
22
Argentina
6
-1
7
7
7
Brazil
6
0
6
5
5
Colombia
5
0
5
3
2
Cuba
if
+4
0
0
0
Mexico
1
0
1
1
1
Uruguay
7
0
7
7
7
a. Including agreements known to be in force, agreements which are assumed to have been tacitly
renewed, and newly signed agreements of uncertain date of entry into force. Agreements include
government-to-government agreements as well as nongovernmental agreements; the latter are listed
only when they assume the practical characteristics of a government-to-government agreement.
Barter agreements and contracts are not included.
b. Totals have been corrected.
c. Subsequent information indicates that the Communist China - Nepal agreement reported pre-
viously is not a trade agreement.
- 100 -
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Types of Trade and Payments Agreements Between Bloc and Underdeveloped Countries
as of June 1960 J*
Czecho- East Communist North North
Area and Country Albania Bulgaria slovakia Germany Hungary Poland Rumania USSR China Mongolia Korea Vietnam
Middle East
Afghanistan TP TP TP TP
Greece IF TP PP TP TP TP TP
Iran TP TP TP TP
Iraq T T T T T T I T T T T
Israel TP TP TP TP
Lebanon T TP TP b TP TP TP
Pakistan T T T T
Turkey TP TP TP TP TP TP TP
UAR -- Egypt TP TP TP TP TP TP TP TP TP TP TP
UAR -- Syria TP T TP TP TP TP TP TP TP
Yemen T TP T T T TP
Ethiopia T T
Guinea TP TP T TP TP
Morocco T TP T T T TP T
Sudan T P P TP P T T
Tunisia T TP T+ T TP TP TP
Burma T . 2/ T T T T
Cambodia TP TP
Ceylon TP TP TP TP TP
India -PP T P Ty TP PP TP
Indonepin T PP T T TP TI,
Nepal _
T
TP
TP
TP
PP
T
TP
TP
}
SP
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Types of Trade and Payments Agreements Between Bloc and Ui cerdeve, open uuntr- es
as of June 1960 al
(Continued)
Czecho-
East
Communist
North ;forth
Area and Country
Albania
Bu_Lgaria
s cva is
Germany
Hungary
Poland
Rlyat_ c
China
i _etn=
Europe
Iceland
1'F
TP
TF
TP
Tr
TP
Portugal
P
P
P
P
.
Spain
P
P
P
P
P
T
Yugoslavia
TP
TP
TP
TP
TP
TP
TP
TP IF
1'F
Argentina
T
TP
. J'
T
T
T
TP .
Brazil
TP
P
P
TP
P
TP .
Colombia
T
T
T
T
T .
Cuba
TP-
Pf
1'P+
T'P+ .
Mexico
TP
.
Uruguay
P
TP
P
P
P
TP
P .
a. Including agreements known to be in force, agreements which are assumed to have been tacitly renewed, and newly signed agreements
4e-
of uncertain date of entry into force. Agreements include government-to-government agreements as
the latter are listed only when they assume the practical characteristics of a government-to-government agreement. Barter agreements
and contracts are not included.
b. Agreement was allowed to lapse.
c. Agreement was terminated.
d. Subsequent information indicates that this agreement is not a trade agreement.
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
Number of Hours per Week of International Broadcasting by Radio Stations
in the Bloc to Free World Areas
June 1959 and June 1960
Hours per
Total Bloc
USSR and
European
Satellites
Communist China
and Far Eastern Clandestine
Satellites stations
June June
1960 1959
June June
196o 1959
June June June June
1960 19
60
1959
59 19
2,999 2,567
1,908 1,717
31 665 160 18~
Middle East, Africa, and South Asia
707 497
601 439
84 40 22 18
Far East
808 653
126 110
682 543 o 0
Latin America
158 107
126 93
32 14 o o
North America
323 284
260 253
56 24 7 7
Western Europe J
862 858
697 688
56 32 log 138
Other J
141 168
98 134
21 12 22 22
a. Excluding Yugosla-via.
b. Target area not determined.
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 Approved For Release 2006/09/06: CIA-RDP92BO1090R000400010010-2
rn
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 Approved For Release 2006/09/06: CIA-RDP92BO109OR000400010010-2
SECRET
NOT RELEASABLE TO
FOREIGN NATIONALS
ECONOMIC' INTELLIGENCE REPORT
SINO-SOVIET BLOC ECONOMIC ACTT '
IN UNDERDEVELOPED AREAS
1 JANU -,RY - 30 JUNE 1960
IMM. RY
(The complete text of tF i= report has been published sepa -iteE
IC--R14-S9
31 Augur 1960
ECONOMIC INTELLIGENCE COMMII
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 Approved For Release 2006/09/06: CIA-RDP92BO109OR000400010010-2
This rn4 ? . la; ontat3.s information affecting
the Nat, Taal r+efensi.. of the United States
within a : meaning of the espionage laws,
Tittle 1.8, aSC, Seci3.'! 93 and 794, the trans-
mission revelation-.)f which. in any manner
to an um:, hori:ed -person is prohibited by law.
P --tad and Disseminated by
dual Intel igence Agency
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 Approved For Release 2006/09/06: CIA-RDP92BO109OR000400010010-2
The reports on Sino-Soviet Bloc economic activities in under?'e-
veloped areas in the EIC-R14 series provide periodic summaries ar.d
analytical interpretations of significant developments in the eco-
nomic relations of Bloc countries with underdeveloped countries of
the Free World. These developments are reported on a current, factual
basis in the Biweekly Reports in the EIC-WGR-1 series, under the same
title.
This report, covering the 6 months from 1 January through 30 Tune
1960, constitutes the ninth periodic supplement to EIC-R14, the tack
ground report on Sino-Soviet Bloc Postwar Economic Activities in
Underdeveloped Areas, 8 August 1956, SECRET. The present supple.:ant
relates noteworthy noneconomic activities to the economic operatijns
of the Bloc in underdeveloped countries in order to place the eccaomi_!
aspects in the perspective of the over-all programs of the Bloc iz
these countries. This report was prepared by a Working Group of the
Economic Intelligence Committee, including representatives of the
Departments of State, the Army, the Navy, the Air Force, Commerce,
and Agriculture; the International Cooperation Administration; th
Office of the Secretary of Defense; and the Central Intelligence
Agency. It was approved by the Economic Intelligence Committee on
10 August 1960.
For purposes of this report, the term underdeveloped. areas in-
cludes the following Free World countries: (1) all countries in the
Middle East, including Afghanistan, Cyprus, Greece, Pakistan, Turkey,
and the United Arab Republic (Egypt and Syria); (2) all independent
countries in Africa, except the Union of South Africa; (3) all coun-
tries in Asia; (4+) all independent countries in Latin America; and
(5) Iceland, Portugal, Spain, and Yugoslavia.
The complete text of this report has been published separatel.f
as EIC-R14-S9.
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 Approved For Release 2006/09/06: CIA-RDP92BO109OR000400010010-2
SINO-SOVIET BLOC ECONOMIC ACTIVITIES IN UNDERDEVELOPED AREAS
1 JANUARY - 30 JUNE 19 O
Summary
Throughout the semiannual period ending 30 June 1960, the Bloc
prosecuted its economic offensive in underdeveloped areas with grog-
ing vigor. As in preceding periods, the political content and direc-
tion of the economic aid program were apparent in the choice of target
countries, the type of assistance provided, and the timing of aid
offers. Although the Bloc continued to press its offensive in the
Middle East and Asia, impressive new gains were scored in Africa avid
Latin America.
During the first 6 months of 1960 the Bloc extended more than
$785 million** in financial assistance to underdeveloped countries,
all for economic development. The level thus established is well
above the high-water mark set in the last 6 months of 1959. C redis
and grants extended in the 12-month period ending 30 June 1960 acc)unt
for more than 1+0 percent of the economic credits and grants provided
since 1951.
Only one military assistance agreement was concluded between the
Bloc and underdeveloped, countries in the first half of 1960. This
accord, reached by the USSR and the United Arab Republic (UAR) some
time in the spring, probably provides a sizable line of credit.
With the obligation of almost $900 million of outstanding creel-Its
and grants in the first 6 months, approximately 80 percent of Bloc
financial aid extended for all purposes had been obligated by midyear
1960. Of the funds obligated for economic assistance, one-half have
been allocated to industrial projects; one-fifth to agriculture (in-
cluding reclamation, irrigation, and hydroelectric power); and one-
seventh to transportation and communications.
* See the chart, Figure 3, following p. 6. Credit and grant ex-
tensions refer to minimum amounts of economic assistance earmarked
under bilateral general assistance or project agreements. Boo, cr dit
and grant obligations refer to those portions of credits and grant,,
extended which have been designated for specific uses or for which
utilization has been arranged by firm construction or delivery con-
tracts. Credit and grant drawings refer to those portions of credits
and grants extended and obligate which have been used for Bloc egjdp-
ment or for the services of Bloc personnel.
** Unless otherwise indicated, all dollar values in this report are
in terms of US dollars.
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 Approved For Release 2006/09/06: CIA-RDP92BO109OR000400010010-2
Drawings on Bloc credits and grants during the first 6 months of
1960 amounted to $135 million, almost two-thirds of which went for
economic development projects. By midyear, almost all of the $820
million provided under military aid agreements and one-fifth of the
more than $3.2 billion extended for economic: assistance had been spent.
`Technical Assistance*
In the first 6 months of 1960, 6,900 Bloc technicians -- 5,700
economic and 1,200 military -- were present in underdeveloped coun-
tries for periods of 1 month or longer. This figure may be compared
with about 6,500 technicians -- 5,000 economic and 1,500 military --
present in the previous 6-month period.
By midyear 1960, 9,400 nationals of underdeveloped countries were
pursuing or had completed courses of instruction at various institu-
tions in the Bloc. Of this number, 2,800 were academic students,
2,400 were technical students, and 4,200 were military trainees.
Although Bloc imports increased 11 percent and Bloc exports de-
clined 8 percent, the level of Bloc trade with underdeveloped coun-
tries in 1959 remained the same as in 1958, in contrast to an average
annual increase of 20 percent between 1956 and 1958. Although the
European Satellites retained their preeminent position in Bloc trade
with underdeveloped countries, the USSR increased its share to well
over one-third of the total.
Except for the Middle East, Bloc trade with all of the underde-
veloped areas in 1959 showed an increase above 1958. A 13-percent
decline in trade with the Middle East -- a region that accounted for
about 40 percent of trade turnover in recent years -- was the main
factor underlying the precipitous drop in the rate of growth of trade
between 1958 and 1959.
Industrial countries of the Free World experienced a leveling off
in their trade with underdeveloped countries similar to that noted for
the Bloc. As a result, the relative share in the trade of underde-
veloped countries for the two major power groups in 1959 remained
about the same as in 1958 -- 93 percent for the industrial countries
of the Free World, 7 percent for the Bloc.
The USSR made vigorous efforts in Afghanistan during the first
half' of 1960 to expedite its extensive program of economic assistance
* See the map, Figure 4, following p. 6.
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 Approved For Release 2006/09/06: CIA-RDP92BO109OR000400010010-2
in that country. An outstanding achievement from an economic and a
propagandistic point of view was the discovery in April of a najoar
deposit of high-quality petroleum and gas. This discovery by Soviet
and Rumanian experts was promptly followed by a Soviet offer to aesist
Afghanistan in producing, refining, and marketing the newly discovered
oil and gas. In addition, the USSR has offered to finance a substan-
tial part of Afghanistan's Second Five Year Plan. Soviet performance
in implementing projects in Afghanistan has been very good in spite of
shortages of local currency and skilled manpower. There is every in-
dication that this creditable record has made an increasingly favcrable
impression on the Afghans and has led them to exercise less caution
with respect to closer economic and military relations with the Bloc.
During the first half of the year, the USSR and Afghanistan signed
construction contracts for several major projects -- new roads, a dam
and a hydroelectric powerplant, another airfield, and several cement
plants. The number of Soviet technicians employed on various projects
in Afghanistan had increased to more than 1,000 by midyear, and further
increases are expected as new projects get underway.
The position of the Bloc in the UAR improved perceptibly. The
USSR achieved a considerable propaganda coup when in January, shortly
after the inauguration of work on the Aswan High Dam, it extended a
second long-term credit for completion of the project. As a result,
the USSR is able to assure its presence in Egypt for some time to
come and to exclude Western nations from participation in a project
that has wide popular appeal. The UAR policies of neutralism abroad
and anti-Communism at home have tended to offset Bloc gains. Progress
on Bloc aid projects has been slow, and completion of the larger 11roj-
ects for which contracts have been signed in years away. Delays in
implementing projects have been caused primarily by the UAR desire to
shop for better deals elsewhere. By the end of June, less than one-
third of the 1958 Soviet industrialization credit to Egypt and less
than one-fifth of the 1957 Soviet development credit to Syria had been
spent.
Iraqi relations with the West improved, whereas those with the
Bloc showed some tendency to deteriorate. In part, this tendency
reflected Iraqi disappointment with the rate of progress achieved
under the 1959 Soviet economic aid agreement. An unofficial visit by
Soviet Deputy Premier Mikoyan in April failed to dispel this Sisal..
pointment or to improve the climate of political relations between the
two countries. Nevertheless, the Iraqi Government in May accepted a
new Soviet credit to be used for rehabilitation of the Basra-Baghdad
railroad.
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Elsewhere in the Middle East the prestige of the Bloc in Yemen
was enhanced by the impressive progress made on Yemen's first modern
port and road. Two of three Bloc aid projects in Iran were completed,
and two additional Bloc credits for the purchase and installation of
textile equipment were extended to private firms. The USSR attempted
to exploit the political situation in Turkey following the military
coup of 27 May by pressing the new government to improve relations be-
tween the two countries. Part of the pressure campaign consisted of
a general Soviet offer to provide large-scale aid for economic develop-
ment. Pakistani officials displayed a willingness to consider Soviet
economic assistance, and negotiations were begun in June for Bloc aid
in exploring for petroleum and mineral deposits.
Africa
.Bloc diplomatic representations, trade overtures, and offers of
aid increased dramatically in several key African states. There was
a growing interest in Bloc offers of assistance, although only one Bloc
credit offer was accepted.
Ghana received its first Bloc aid, an industrial credit of $3.1 mil-
lion from East Germany, and was considering an additional large-scale
offer from the USSR. Surveys of industrial projects and the training
of Ghanaians were carried out by East Germany during this period. Trade
rose significantly as a result of energetic tactics pursued by the Bloc.
Guinea received several gifts from the Bloc, including a substan-
tial rice grant from Communist China. Implementation of the July
1959 Soviet credit was assured by the conclusion of a protocol under
which Moscow will provide material and technical assistance for sev-
eral key industrial projects. The number of Bloc technicians working
on surveys, constructing industrial plants, and acting as advisers to
key Guinean ministries rose sharply. A large number of Chinese Com-
munists arrived to assist in rice-growing projects. Trade with the
Bloc expanded significantly.
Although the Bloc made important efforts to strengthen its initial
foothold in Ethiopia, actual gains were somewhat circumscribed by
growing Ethiopian wariness of Soviet subversion. Czechoslovakia and
the USSR prodded Ethiopia to hasten utilization of credits that they ex-
tended in July 1959. In March 1960 an agreement was signed with the
USSR that mentioned an, oil refinery, a gold ore dressing plant, geo-
logical and mineralogical surveys, and a feasibility study for a metal-
lurgical plant, but actual implementation does not appear to be as-
sured. The number of Bloc technicians in Ethiopia and the Bloc's
share of Ethiopia's trade remained small.
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 Approved For Release 2006/09/06: CIA-RDP92BO109OR000400010010-2
The Bloc vigorously pursued its economic offensive in India,
Indonesia, and Nepal. India remained firmly committed to a policy
of nonalignment and to a belief that even larger amounts of Bloc aid
can be absorbed without creating a serious dependence on the Bloc.
Obligation of Soviet credits for specific projects under the 't'hird
Five Year Plan highlighted the Bloc aid program in India. Indian
acceptance of a Soviet offer to aid in petroleum development as wall
as to supply large quantities of petroleum products further increased
the Bloc's role in India's petroleum industry. Poland for the first
time extended credit for India's industrial development program.
Although friction in Sino-Indonesian relations continued, eco-
nomic ties with the USSR were strengthened. Indonesia accepted a
$250 million Soviet credit for economic development. ImplementatJon
of Bloc aid programs proceeded at a more active pace, and the number
of Bloc technicians present increased. Trade with the Bloc rose in
1959, and for the first time the Bloc share of Indonesian exports ex-
ceeded 10 percent of the total.
The Bloc accelerated its efforts to insure Nepal's neutrality, to
reduce Western influence, and to overcome suspicions aroused by Chines
Communist border aggression. Nepal accepted an additional grant of
$21 million from Peiping and agreed (1) to permit the establishment of
a resident Communist Chinese Embassy, (2) to accept Chinese Communist
technicians, and (3) to send Nepalese technicians to Communist Chia
for training.
The present Burmese Government, more favorably disposed than its
predecessor to Bloc economic overtures, is considering credit offe-s
by Czechoslovakia, the USSR, and East Germany. Two more contracts
under the 1958 Soviet credit to Ceylon were concluded, but only one
project is under construction. The reduced volume of rice and rub1090 R 000400010010-2
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;W.- O
_: 1J.a
 Approved For Release 2006/09/06: CIA-RDP92B01090R000400010010-2
SECRET
FORIGN NATIONALS
NOI RELEASABLE TO
,NOT RELEASABLE TO
~OREBGN NATIONALS
3ERET
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