SPECIAL SURVEY OF SELECT SOVIET BLOC ECONOMIC ACTIVITIES IN CERTAIN FREE WORLD

Created: 4/23/1955

OCR scan of the original document, errors are possible

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CI4/R2 IrWa2 (ORR2 Soptontor

TITJS UlTffilAX COrraiDSIIATIOKal lEFffiSE

WITHIN SHE lEAia'BpS-rrg SSPIOIUGE IAOS

W^rmiOUZEDIO! il SITED Hf LAW

CENTRAL 1OTELLI0EICE AOEtlCI Office of Rosoaroh and Reports

CIA HISTORICAL REVIEW PROGRAM RELEASE AS9

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APR

MBWRAKDUM FOR: Assistant Director for Reports

SUBJECT: Sonet feoonsae"

le requested that your officerojectthe nature and latent of Soviet economic penetration ofWorld. It la requested that your office initially undertake

a Burvcy of those areas outside the Soviet Bloc ln which tbe Soviot Bloc countriee give lndicationa of asking ecoooalc inroeda, and, aubsequently to aakc detailed analyBes of Soviet ecoooalc penetratioao into the specific areae of Soviet concentration.

recent aoathe there have bcea aeveral reports ofefforta to provide technical asaietanco aad equipaeat tocountries, auch as the proposed Dorict etccl wdll toin India aad technical assistance providedparticipation by tbe USSR end Satellites in trade fairsthe world has conaidernbly increased, and the Soviet countries

V? tr**eProgram during the latter part3 aadk celliagoneidereblo expanaion of trade. There have been excellent individual roporto on the Soviet trade offensive, and on other aapeets of economic penetration, but there bee been no aaalyaie of where the Soviet Bloc appears to beoncerted effort and the nature of tale effort, with the exception of

in tils field! iaportaace of Soviet activity

3- asentially required is the answers to what tbe Sovieta are doing specif ically la the Free World, not dlecuaaioaa of tbe various tactics used, aa these have already bcea adequately covered. Aa an example, it la wall known that the Soviets are aakiag severe inroads into Afghanistan, and it i. also known io wufcb proJeetTlho,

eol^ClfiJa^yare not eo clear for other

countries of the Free World. Specific Inetoncea are known but thore has neveroncerted and continuous effort to collate and analyze material relative to Soviet economic penetration of the Free WorldT^

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'CIA HISTOniCAl REVIEWfi;TSZED

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econdary request which devolves froa theotlnuatlooextension of the work undertakenit ls expected that some of thlc

materialnclassified, the so ureas for the ubove report are,arge extent, classified, but whether classified or not, suchwill be of value to this office. It would be appreciated if, in addition to the attention currently given to Soviet trading delinquencies, material would be prepared on evidences of lack of good faltb on tho part of the Soviets, variations from established business practices and ethics, difficulties in settling credit balances, difficulties encountered by private firms in dealing with the nationalized Industries of the Bloc, and Coanunlst use of trade channelsropaganda medium. Instances of non-fulfillment of trade agreements or of reneging on contracts will bo appreciated. In this context, analyses or collation of material on the strong debtor position which the Soviet Bloc end particularly the USSR has established would be nost useful, as well as short fells in actual deliveries.

" "Chief

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TABLE OP CONTENT'S

SUMMARY AND

Italy

Norway

7 en

36

NEAR EAST AND AFRICA Egypt Greece Iran

.

41

Lebanon Saudi Arabia Sudan Syria

SOUTH ASIA Afghanistan

FAR EAST Burma

55

AMERICA

TABLES

Plant Installations In Pree

Worldwith Sino-Soviet Bloc 73

1> At the outset It should bo adndttod that ln any particular instance, end frequentlyhole aeriea or lnatancea, it ia difficult to dlatin-gulsh between econosdc penetrationree World oconoay and normal ccanerclal relations*

It is only when the totalityree World country'e oconosdc relatlona with tho Sino-Soviet Bloc ia conaldered ln the context of ita dofnaatic oconondc needs that anything resembling an identifiable picture of ecoDomie penetration say emerge.

Thin survey repreaenta anap Inicture baaed on selected aapecta of Soviet Bloc economic relations with Pree world countries.. The aapecta selected are sees of thoee which are likely to be found where the Bloc intends to penetrate the economyountry. Logical next steps would be re so arch-in-depth on those count rise which appear to

be priaary targe to for Bloo economic penetration.

4- Certain cautions should be observed in evaluating the resulta of thia surrey. Pirat, Inanning effort aa this, lnforaatlonora plentiful on tha more recent Sino-Soviet Bloc overtures to the Tree World, thus directing attention to tho Middle Eaat and Aaia and away from Wo stern Europe end Japan. Second, Bloc overtures to coun trios In the neutral camp or thoao relatively uncoaaalttod politically are naturally more noticeable. The resulting geographical bios in favor of underdeveloped

countries io Inherent in Uioapproach necessitated by tho operational requirements.

Nonetheless, the survey has been useful inirst approximation of Slno-Soviet Bloc efforts at economic penetration. This approximation is adjudged Adequate for operational programing purposes.

ND CONCLUSION:;

Soviet Bloo countries, especially tho USSR, Eaet Go many, Czech" oSlovakia, and Hungary, have greatly expanded their offerings of capital equlpmont and technical aid to certain Free World coon trio a. Ths most extensive bloc programs are with Afghanistan, India and Indonesia; stronger economic relations are fast developing with Yugoslavia and Egypt; in addition to Egypt, other Arab states, notably Syria and Lebanon, have been the object of recent concerted trade activities.

/lowed by quantitative standards; the Bloc offers are not But some of the proposed means of repayment are of considerable interest. In addition to the mora conventional means, the Bloc accepts repayment in kind and in the profits of the enterprises for which Bloc equlpmont and technical aid are provided. The Bloc countries display

an acute opportunism in seeking to purchaoo surplus goods, especially agricultural cosnoditios. Also, the Bloc seems eager to bid on projects when negotiations with Weatorn companies hnvo broken down. Terms offered by Bloc countries are generally as favorable as, and some tines more favorable than, thogo available from free world sources.

Under the pressure for rapid industrialisation and improvement in consumer welfare, capital-hungry countries of Asia and the Middle East are eager to oocure tho maximum possible in loans and asnlotanco. Some of these countries havepecial effort to develop loan agreements

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ariety of countries. Doth Bloc and Pree World, so aa not to be beholden to any one ln particular and alao to maximize their credit Other oountrlea, faced with eons of the sane agricultural surpluses found oleewhsre in the Pree World, have actively sought an expansion of trade with tho Bloc in order to relieve the resultant pressures on their donaatic economies. In still other instances, asalatance has bean sought froai tho Bloc to deaign, build, and train technical personnel to operate industrial installations rangingteel mill to atomic energy plants. Because of the large number of auch inquiries and tho relatively amall number of completed project negotiation* It is aa jet not quite clear whether tho inquiries represent bona fide attempts to eottcuaiaate deals with the Bloc. There la at least bobo evidence to suggest that cortain Western countries view their success In getting Bloc offerseverage on. for larger aid coaalttnanto.

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Finnish Foreign Trade (Kill loos of Dollars)

Bloo

Bloc

Large reparation payments by Finland to the USSR had tho effect of gearing the Finnish eeononr to Soviet requirements. With tho end of reparations^trade with tho USSR and the Bloc continued to increase because tho Soviet Bloc provided the only ssarket for tho products of these high-cost industries. The percentage of Finnish trade with the Soviet Bloc decreased from3 This has resulted from an increase in trade with the Free World rather thanecrease in trade with the Bloc. About three-fourth's of Finland's oxporto to tho Bloc have gone to the USSR, but imports have been widely distributed.

I. Trade Agreements with the Bloc Countrlos

The Soviet-Finnish long-term trade agreements, concluded in0 andave tightened Finland's economic dependence on tha USSR.

The USSR la currentlylgniflcftnt percentage of Finland's petroleum raqulraments, ovon though Mating with competition from was torn oil companies* Thoon aide rahle percentage of Finland's requlreraonts of grainvsugar_ and cotton. These agreemento hava not always caocessfullyrkefr for Finnish products. Underinnish experts of metal Industryen export item relying almost entirely on th* Sovietcut IOC or. ths ground that prices were too high. Using tho same pretexthe Soviets sharply curtailed the import of prefabricated houses, another commodity which relies almost exclusively on the USSR for its export outlet. The quota for prefabricated bouses was reducedq. meters in spite of the fact that tbe long-term agreement called for USSR Importsq. meters of housing annually.

Finland has concluded^ trade agreements with all theexcept Albania. 0 trilateral agreements havewith Satellite countries to cceqxtnsateurplus into the

II. Loans and Technical Assistance In4 the USSRinland gold loan amountingillion, with 2l% interest repayable in ten years. As of early0 million was drawn from tho USSR to support currency ref tho

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Bonk of Finland. It is believed that tha balance will be used forpurposeo chosen by the Bank. In5 the OSSRecond gold loan under tho samo terns as the first loon. Ths second loan has been allocatedtate-owned woodworking company, the Finnish Board of Forestry, two state-owned power companies, the State Railway public works agencies and for other productive purposes. The funds will primarily be used for the purchase of western machinery and equipment.

Tho USSR submitted an offer to construct an oil refinery in Finland. The contract, however, was placed with an American firm which has had experience in construction projects for the loading oil companies. Two Russian proposals had been previously rejected by Finland on technical grounds.

III. Miscellaneous Inor the first time in Finnish-Soviet tradeolitical appendix vas signed by the USSR and Finland and attached to the long-term economic agreement. This appendix appears to reaffirm some of the principles ofS Soviet-Finnish Treaty of Friendship. Inoviet-Finnish Scientific and Technical Cooperation Agree-msnt was signed. This agreement provides for the mutual exchange ofand information andoint ccamdasioQ to administer the program.

Tho resale of Finnish property acquired by the USSR to Finnish

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interests has been In progress It has resulted In tbe return of aboutires out of an originalold. Most of those firms remaining In Russian hands are small with tho exception of the company whichSoviet petroleum, negotiations are in progress for tho possible transferood processing firm.

Icelandic Foreign Trade (Thousands of Dollars)

PORTS

Soviet Bloc

Soviet Bloc

4

6

5

3

9

7

9

oxporto are restricted almost completely to fish and fish products. 2 British boycott of Icelandic fish forced Iceland to seek alternative markets with tho rosult that, within tho past ooveral years, the OSSR has become the second largest market for Icolandlo fishn addition, the USSR has bo cone important to Icelandource of supply of row materials, particularly liquid fuels and conant.4 the USSR was supplying almost all of Icelandic oil imports. Iceland has concluded trade agreements with all the European satellites except Bulgaria. Iceland exports fish and imports principally textiles, machir.ory, coal and vehicles.

In4 tho International Bank for Reconstructionoan to Iceland for the constructionublicly owned, integrated cement plant. At least three offers to assist in theof tha plant were received fram the Soviet Bloo. Those offers

ineUded tfca I'allvlMiconstruction of the plant by thaKtpCmmt by CaschoslovaKlahe sale of

iropos.il to sell fish products for Eaet

GermanuJuced In the Icel.indlc Parliament in thoIs interesting to note that tho Bloc haa aopeared willing

tol -jituld cut off the market for Soviot Bloo cefnar.t. Up to the present tlw, however, none of theee offera have been accented by Iceland.

Italian Trada with tho Soviet Bloc (Ml? none of Dollar a)

World

From

i^cvlot Bloc

Percent

World

From Soviot Bloc

Fercont

4

BO SS5

66

? 63

trado with tho Sino-Soviet Bloc haa boon fairly constant in both value androportion of total trade.

There le relatively little proa euro from Italian Industry andto export <V3. because many Italian exporters have had to

wait long porioda ho be paid until the Soviets balanced their bilateral

accounts. 5 the Russians have not offered imports in uhich theinterested. Italian Imports of Russian hard wheat and cotton wipeddeficits, but these ccssodltiee we not available In substantialin

Therelurry in Sicily early In the winter*. boughtons cf low quality lemons at prices sanewhat In excess of current esrport prices, at the earne time Czechoslovakiaons of orangee end tangarlneoons ol lemons. Tba Soviet purehoning ageote wore also -abowing interest .In oceential cIIg- shelled sweet alaonds and cipors.

On tho other hand, Rumanian oecaent la being Imported Into Sicily and oold in small lota at ahlpslde to persons designated by Communist agents. The price is bolow tho going prico for cemont in Sicily. This current Soviet commercial interest in Sicily is in direct contrastrevious lack of activity.

Italian dependence on Polish coal has lossenod significantly Plants formerly utilizing coal have boon converted for the use of other typos of fuel, also, Italy hasio to obtain coal from other sources, such as tho United States. Poland had formerly employed coalargaining weapon for strategic goods.

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Norwegian Trade with tha Soriet Bloc (Millions of Dollare)

Percent

Norway ia considerably dependent upon Bloo markets for her fish. In tha first ten non tho4 the USSR boughtercent of Norwegian fish exporte, trading grain for fish. Czechoslovakia trades sugar for fish.

Swedish Foreign Trade (HUllooo of DoUara)

Bloo

Bloc

trado with tho Soviet Bloc has boon dropping conslatontlyoth in terms of vilua and per cent of trade.

Sweden depends upon Poland for abouter cent of bar anthracite and hi

nlnoufl coalzechoslovakia forer coat of bor auger Inporto,. foror cent of tho cereal Importser cent of animal feed Imparts. Of her exports,or cent of the fl3h,or cent of the cheese,er cent of tho synthetic fiber,or cent of the dyostuffo, ender cont of the construction and pining machinery are destined for the Soviet Bloc.

Duringime vhon the Swedish textile and clothing induotrlGji ivoroepressed state,. offered to buy0 nen'u suite- and otlwr garoente. This seemed at tho time toropaganda novoas novor actually Daterializod.

Thet. bud Sweden are encouraging technical discussions botwoonor tho exchange of inform tl on _

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SWEDEN

and Swedish electric power exports not together In Marchgroup of Soviet technicians came to Stockholm andwedish groupMoscow. The exchange appears to have been limited to technical studyIn the electric power field. Discussion waa primarily on theof high tension, direct current.

similar oxobongo of visits on peat produotlon io plannedwedioh delegation la tooviet laecnexdsedand the Russians willwedish briquette factory and laboratory.

YUGOaUVTA

Tngoalav Foreign Trade (Milllong of Dollaro)

Bloo

Bloc

s/

n paymentR- debt.

Yugoslav trade wltb too Soviet Bloo accounted for about half of theoreign trado prior to the break in diplomatic relations Then no trade was reported for tbe four. After tbe resumption of diplomatic contactrade agreements wore concluded by mid-year which were abouter cent fulfilled by Trado agreements negotiated5 withungary, Poland, Caech-oSlovakia, Bxeaania, and Bulgaria amounteach way. Inrado agreement with Bast Germany waa signed4 for trade valued atillion each way through It will be noted froa tho table above that thie io approximately ona half of tho value of trado On the basis4 total trade, the new trade agreesaenta

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with tho Soviet Bloo are abouter cent of Imports aoder cent of exports*

Rocont economic overtures by Sino-Soviet Bloc countries to Tugoalavia have includadoffers of financial sBslstance as well as aid in industrial iBprovomont.oreign proas report statos that Hungarian, Csaeh andoncede representatives in Belgrade have eh ova interest In Macedonian industry end *doh to investigate tho possibilities for foreign investment there. The articleement factoryextile factory in south Xugoalavln as being incompletely developed and in need of largo Investments.

During the past monthhe Yugoslav Ambassador to Moscow stated that it was probable that tho DSSB would supply equipment on credit for Tucoslay Induatrial enterprises. Ho- stated that this would not in any way involve roconstitution of joint compnnlan nor give tho Soviets any flavor of ownership of these enterprises. He subsequently confirmed that tho USSR hadoanm Ion in gold or convertibleillion for imports of raw to rials and en unspecified amount for financing construction; all atnterest. This rate is very attractive to Tugoalavia in view of the fact that foreign debt service costs that countryilllon per year.

Jugoslav officials revealed in early September that the Soviets haduclear reactor and related equipmentwo-year credit basis.

Egyptian Foreign Trado (Hilllooo of Dollars)

TOTAL *mWITH BLOC

iSEfiEaS

Parcent

oftotal

Egypt ls In the un-onrlahlo position of being almost completely dependentingle commodity, cotton, for Its foreign exchange. Pacedecline In her Free-World markets, Egypt has recently been forced to tarn to new markets, m1 thin thoBloc. Bloc conn trios hare boon quick to increase their imports of Egyptian cotton and to make propagandistio "hay" in the process. In return Bloo countries hare gained access to Egyptian petroleum markets and hare established new outlets for their capital goods. erious econoaio reorientntion appears to be in its Incipient stage.

I. Trade

Although In recent years Egypt has been unable to export as much as it imports, it has maintained an oxport balance with tho Soriet Bloc.

Cotton is the major export of Egypt accounting foroer cent

of the value of all exporte. Opportunities for the sale of cottontrong bearing on the geographic distribution of Egypt's foreignr government le seriously concerned that United States exports of cotton under aid programs may be displacing demon! for Egyptian cotton. Egypt estimates that tha disposal of surpluscotton next Tear will result in losaes to Egypt of about0 orf national in coon which far oxceedsaid to Egypt, ia recently aa5 Egypt's Minister of Finance stressed the fact that our action ie forcing Egypt to seek larger outlets in Soviet Sloe countries, including China.

3. Cotton exports to the Soviet Bloc have accounted for abouter cent of Egyptian cotton exports in post-war yoara. The Bloc continued to be an active buyer and has proposed several barter arrangements. Too Bloc's cotton purchases this year havebove those of lost season and have accounted forf the current season's total cotton export sales, compared with lOit last year.

t. and fiuaania are trading petroleumcotton. The Egyptian import of Soviot petroleuma atcf Free World suppliers, who are not only deprived of theare re quested to distribute and aarket tho oil through theirsituation is considered so serious that ESS0 may withdrawEgypt.

has agreed to buyhydraulic shungtlng engines

from Hungary vcLtfa payment to be ln cotton* In thisest German flrai teid submiter cent lower with throe-year credit.

If.'ngary has also offered anat in exchange for cotton and haa aaked for an opportunity to buy more cotton on credit.

ie attempting to sell heavy machinery toite cotton, and for thie purpose hold on industrial exhibit

first trade agreement between Communist China andsigned in5 andhrea-yeer period. It providesexchange0 tona of rolled ateel froa Chine for Egyptianshould be noted that Chinaet importer of primary andforms and secures large Quantities from other Soriet Bloc countries.

4. This year Egypt has also been faced with the problem of disposinguapor orop of rice. Egypt complained to. in5. disposal of surplus rice in Japan has dopriTed Egypt of itaubstantial Quantity of Egyptian rice has been purchased by Hungary and tho USSR.

IX. Technical Assistance A. Construction Assistance

1. Caocho Slovakia has agreed to supply Egyptuiactory to produce rubber and leather footwear.

2* East Germany hasactory for the production of pipe

and reinforced concrete poles. Tha offer was made In response to an Egyptianequest*

3* East Go many has cancelled an agreement, originally accepted by Egyptelow the next lowest bid, to provide Egyptigh tension network*

4- East Germany made every effort to obtain large orders for the installation of power plants at the Nile Delta irrigation project but only succeeded in receiving an orderigh-voltage and low-voltage power plants. Subsequently, East Germany found it impossible to meet thedate for completion East German sub-contractors were unable to mako deliveries because of shortages of material. HaunUi extension of tho contract was requested but, should Egypt insist on tho fulfilment of theigh penalty will have to be paid*

One of Egypt's foremost physicists, roturning in early5onference of atomic scientists in Moscow, reported that the Soviet Institute of Nuclear Problems had offered to give Egypt (and other countries) "all tho help they nooded to construct atomic energy stations".

The Hilhem Pioek factory in Hungary is designing plans for tho constructionridge over the Mile. Jassof Lengyel, head of the bridge unit, will go to Egypt to show the plans.

It was reported that the USSR offeree! technical and economic aaalstance through the auapicea of the united Nations but that Egypt doollned bo causa it did not wish to open the country to RussianSoriet Aiabacsador Soled5 delivered in writing to the Egyptian Foreignetailed formulation of the proposal for Soriet assistance for tho High Dam project. It has been reported that Prime Minister Jamal Abd-al-Naar iaegative attitude toward Soviet assistance on this project.

In connection with tho most recent trade agreementvakla has offered technical assistance to Egypt. Egypt has agreed to accept Caeca experts within the "fraaework of existing regulations".

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1. The Egyptian Minister of the Interior expressed the view that there have beenhat more and sore persons of Russian nationality are handling Soviet Bloc affairs in Egypt. Previously the Russians have left the handling of Middle East affairs to the Sotellite representativea. Contacts with local CoeEBunlats for the scat part are still made by Satellitea.

ecant Egyptian government invitation for bids for railroad freight cars, Poland bidach, CIF Alexandria, ccapered with the

lovest Western bid of.

3. The Soviets h'tve reportedly offered Ecypt agricultural equipmentelov conparatlva prices.

U. eries of high level discussions with thethe USSR and the COE signed an "Open Agreement" of fiveagreement calls for the USSH

to ship Jetof which are to be delivered by Of thesere to be "medium" Jet bombers (presumably

nd tha rest Six jet trainingeavy tanks,

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6 torpedo patrol boatsubcarlLnesjars also included in the initial order. By the conclusion of this agreement the USSR has brokenong standing policy of supplying arms only to Sino-Soviet Bloc countries.

Greek trade with the Soviet Bloc fen* increased substantially3estoring it to the levels

Greece and the Soviet Bloc have signed several trade agreements. The Bloc countries Import immediately froa Greece up to the full lladt of tho credit coiling of the agreeaenti then trade usually comestandstUl while efforts are aade to Increase the celling. 3 Greek exports to the Bloc were much greater than iaports, and Greece has not been able to obtain payment.

Soviot Bloc countries claim that Greok economic difficulties could be overcooe by more trade with the Bloc and that Greek trade controlsepressant. In some respects the Soviet trade offensive has been successful.. sold Greece kerosene and heavy fuel oil at vory low prices.

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which seemed to confirm, Greek suspicions tbat Western companies wore charging unduly high prices. Also, the Greek State Hatch Monopoly was able to con-elude an agreement with Czechoslovakia to supply matches at extremely low prices. On the other hand, the Greeks were able toobaccoat favorable prices. ho Bloc boughtercent of Greek exports of tobacco, fruit, vegetables, olives and olive oil. As yet, Greece ia not dopendent upon tho Soviet markets,er centIn exports could mean the differencerofitable oryear.

1KAN

Iranian Foreign Trade (Millions of Dollars)

Bloo

Bloc

has beenlzeablo share of Its foreign trade with the Soviet Bloc, especially during the last few years when oil exports were negligible*

The major import/ from the Bloc are cotton fabrics, cement, and sugar, which are supplied chiefly by, Rangary, Czechoslovakia, and China. The chief experts are wool, raw ootton, rice, and oros which are destined primarily to, Letters were officially exchanged In5 for trade be .ween Iran andduring tho year beginning April

Trade between. and Iran is convenient for several reasons.

Most of the Iranian piople livu in tho north ond most of tho agricultural productsr export are grown there. Transportation costs to. are lower tian those U> the Persian Gulf where other inports could bo Obtained. Tiwis iible to furnish sugar, cement, and cheap

textlloa needed in Iran. Also, tbe famous caviar fisheries on the Caspian Sea were Jointly operated end the catch aarketed through the Soviets

In. financial and frontier agreement waa signed by the Shah of Iran in5 and by the Soviet praesidium It ia now ready for lanleeonUtion. reader the terms of this agreement. is to repay Iran ln comacditiea forH/wi Iranian cash reserves seized by Soviet wartime occupation forces. The first shipment of Russian wheat against this began to arrive ln March before ratification. . may also snip Industrial andmachinery.

Iran and. had agreed5 to cooperate in pest control and plant disease up toilometers inaide oach In4 five Iranian entomologistsocust Control Conference in Koscow. At that time the Russians offered Iran all the equipment and lnsocticidoa that thoy night needupply of radioo to pec and laboratory equipment. Tho Iranian delegates refused to accept thie help .without the approval of the home government. The delegates agreed to aeek govern -sunt approvaloint desert locust re search station in South Iran and Russian technical asoletaneo.

Tho Iranian government isussian aid offer, accordinguly newspaper article. The offer ia reported to include the free use of four dredging boato for dredging the Caspian Sea coasts.

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instructions 1bsued to too Tudeh Touthin5 requested tbe members to espouse tbo following Unas when discussing international relational "The Shah ia striving to bring Iran Into war for the sake of the imperialist war-mongers. On the other hand, the Soviet Onion is trying to overcome differenoeoriendlyho Soviet government ia giving aid to all neutral and needy countries in the form of proposed financial and technical help. The people should want to accept Soviet friendship and therefore, profit by tbe proposed technical aid. They should ask for industrialnd agricultural equipoonthich the Soviets propose to give Iranarter basis".

The Hungarian-Iranian trade agreement concluded in lata May or early5 calls for Hungarian exports of "various kinds of factorymachine tools, agricultural machines, and vehicles" among other things.

Csech newspapers reported in June that Ctechs hadugar rofinory in Iran.

israel foreign trade (millions of dollars)

bloc

bloc

. is becoming ono of the major suppliers of oil to israel. inasmuch aa israel does not trade with its arab neighbors, the soviet bloc is one of its nearest sources of supply. soviet .til deliveries4ons and represented most of israel's imports from.

it was reported in5 that the ussr had offered technical aid to israel. recent foreign press reports state that the ussr is especially interested in developing israel's oil production and refining faoilities and in industrializing the megov. israel reportedly has indicated that each project will be considered separately.

Lebanese Poroign Tradena of Dollars)

TORTS

Bloc

Bloc

trado with the Soriet Bloc continues consistentlyateer cent of both imports and exports.

Czechoslovakia is one of the main Bloc traders with Lebanon. It has boon rumored that Czechoslovakia has plans under way to supply equipment for seven factories (to produce porcelain, crystal, glass, augar, and electric materials) with payment in goodseven-yeer period. has also made the best offer to buy the output of an iron mine, in which the ore haa an iron content ofer cent iron, being developed in southern Lebanon.

A Lebanese delegation of the Minister of the Rational Economy, the President of the Association of Lebanese Industrialists .end severalvlsi'xjd Czechoslovakia forays during The visit was made at the imitation of the Czech government which also paid all expensec.

Curing the visit tho Cseoha offered to send, and the Lebanese agreed to rec'iiv( j, -sech consultants (at no charge to Lebanon) who would make

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rtudiea and re coercendationo which would asslat tha Lebanese in eatehliahing new manufacturing plants for coraad.cs, glassware, paper, lumber, etc, using Csach equipment. Cseoh tochnlciana would be furnished for theof machinery installation and for training in the operation of the plant end in processing techniqueso

egation In Beirut offered fire deep hole rotary drilling rigao bans so firm In5 at one third the American price for coan>arable riga. These were to be used toater walls for the Syrian Government In south Syria. The Soviets told the firm that theyp ply all equipment needed for tbe well drilling operationa.

une meeting with Soviet officials in the Legation proaaure was put upon company officials toompany for oil exploration in Saudi Arabia. The Sovieta offered to supply all equipment on credit with payment to bo made subsequently out of profits. Officials of the Lebanoao firm maintained that oil operations In Saudi Arabia would be imposalblo in view of Amorican rights there. The Soviets became angered by their refusal to consider the offer and apparently both deals involving Soviet drilling rigs have fallen through.

During5 Kant German interests submitted an entryontest for designsobacco factory to be built ln Lebanon. Tho German entry did not reveal the country of origin.

While tho Soviet Bloc apparently lo not raking any aubotantlal ofo increase trade with Saudi Arabia It haa ongagodew activities which Indicate that there iaomplete lack of Interest on the part of the Soviets.

East Germany, for exanplo, has boon negotiating since5 ovar constructionement plant in Saudi Arabia. Plantson capacity wore under discussion earlier in the year, whilelantons daily capacity.

Officialsobanooo drilling firm were approached by Sovietat the Soviet legation In Beirut concerning the possibility of their under taking oil drilling operations in Snudi Arabia using Soviet egulpmont, all of which would be furnished ou long-term credit to be paid for out of subsequent profits. The Lobanose officials protested that such anwould be Impossible in viou of tho American monopoly there. Tho Soviets, angered by their resistance on this point, protested that tho important thing was not the success of tho vonturo but the formation of company for such operations in order to show tbe world that the Russians wore after "the righthat they "want to helpnd that "ovoryonu can do his own work". Grasping for oxcuaou with which to stall off the Russians the Lebanese firms offlcorseed for technical experts forenture. Tho Russians replied that these could bo

SAUDI AHAH1A

supplied "Indirectly". The Soviets wero considerably agitated over their coolness toward this proposition and promptly offered stiff or terns on another deal pending between the parties.

An5 roport statoa that tho Soviets have offored amn and asszunition to King Saud on "highly advantageous terns".

Sudanese Foroign Trade (Thousands of Dollars)

Bloc

Bloc

recent years, exports bare been below imports doe to the drop in demand for cotton. Trade with tho Soriet Bloo is1'interesting In that Import* from the Bloc are usually ouch greater than exports to tho Bloo. Czechoslovakia and Poland hare been tho major sources of imports.

Aboutsechoslorak Trado Mission was In the Sudan tootton procurement.

The Soviet Embasoy in Cairo appears to have been the first to capitalise on the recent Egyptian-Sudaneso political developments. Inission from tho Soviet Embassy in Cairo approched the Sudeneso Government to discussof trade relations between the two countries. The Soriet delegation -suggested that Russia should supply the Sudan with experts required forto replace expatriates retiring becauso of Sudanisation. Interest was expressed in major development schemes like tho propoood Rosoireo dam projoct soon to be carried out by tho Sudanese, Presumably as an outgrowth of this interest the Sovietsesire torade advisor's office in Khartoum.

STRIA

Syrian Foreign Trade (Thousands of Dollars)

(WORTS

Bloc

Bloc

trade with the Soviet Bloc representsmall fraction of total Syrian trade. Imports consistently exceed exports. The chief export4 was raw cotton which was shipped to China (including Formosa).

During Hay and June, officialsebanese firm vero offeredrotary drilling rigs at low prices for their userojectHauran district of South

indicate that ths Russians have hardened their terms after officials of the Lebanese firm balked at Soviet efforts to persuade them to engage in drilling operations In Saudi Arabia, again using Russian-made equipment supplied on very favorable terms.

The French-controlled North Syrian Railway Lines have contracted recently toreight cars: rom the nationalized trade agency of East Germany (DIA) ondrom the Austrian firm of Simmering. Apparently the railway approached aboutirms, mostly in Europe. DIA made the lowest bid and Simpering upon request reduced its bid to the level

'

of DIA. Therefore tha order was split. Tho Austrian firm reports severe prlco competition from tho Bloc throughout tho Kiddle East.

Negotiations were reported under way in5 for Uio constructionighway across Syria by Hungarian engineers. Ths report stated further that it was Hungary's intention to obtain Syria's promise not to grant any possible requests for asylum.

Two members of the Syro-Lebaneso Communist Party Central Committee were granted tho agoncy for the sale ofautos in Syria and Lebanon. In announcing tho opening of this agency in5 they stated that this was the first agency to be opened in the Middle East for the purpose of selling Soviet goods privately; that it had been agreed in Moscow to open such nn agency because of the strong anti-West attitude on tho part of tho Syrian government andnd that the Soviets are finding so much support in Syria nnd Lebanon that they havo decided to supplement their political propaganda by economic and commorcial propaganda.

Offers havo boon made to Syrian businessmen by the East Gorman trading organisation, DIA Invest Export,ugaroileroworry battery manufacturing plantydroelectric station. Revised estimates of costsement mill previously orderedyrian firm wore sent by DIA Invoat-Rxport in May The now estimated coots, including machinery, electrical equipment, test cqulpnsnt, freight etc. are

Czech nowspapers reported in5 that Czechs had alreadya largo agricultural combine in Syria.

SECRET

roam

Turkish Foreign Trada (Minima of Dollars)

Bloo

Bloc

JJBUy^

Tbe USSR haa beenrada offensive in Turkey alncohie offonalva has been characterized by advertieement of Soviet goods (ccphasiting capital eeulpmont) ln the Turkish press and trade Journals and at the annual Isadr International Fair, and has reportedly been supported by offers through official channels to supply capital oqeipraent on credit to be repaid from subsequent production. hould be noted that Turkey is still payingoviet loanillion gold dollars madeho paymant of which will bo completed Ciechoslovakia and Bast Germany hare also cads significant efforts to increase oconomle relations with Turkey.

I. General Trade

Trado with the Soviet Bloo accounted for approximatelyer cent of Turkish exportser cent of Turkish importshich ia almost

- 2s

3 and tho hishest evor recorded. Theoo are understood to bo pre using Turkey to supply more goods. Turkey has trade agreements with Bulgaria, Czechoslovakia, Best Germany, Hungary, Poland, Rumania, and tho By and large this trade consists of tho exchange of Turkish agricultural products for Bloc manufactured goods.

From the Soviet point of view, tho trade offensive and offer of economic aid is well timed. ritical shortage of foreign exchange ie endangering tho Turkish government's investment program.umber of operating in dun tries are sufferinghortage of imported raw materials and spare parts. Socio loans obtained from OKKC countries have been tied in with coradtoents to liquidate outstanding ecencrclal debts.

U. Factory Installations froa Bloc Countrios

1* Following5 reports that tho USSR had expreased (through officialillingness to provide Turkey with capital equipaant on credit, the Turkish proas reported in5 that tho USSR had offered to provide equipment on creditotton thread mills ia southwestern Turkey, to be repaid by the shipment of threaderiod ofears.

2. Inast Germany was reported to havereliminary offoreramics factory.

3*5 report statedontract had been signed with Czechoslovakia for delivery of complete equipmentotton soMl to be delivered56 with assembly to be supervised by Cseeh technicians.

Scmary

There has been substantial Soriet economic penetration of Afghanistan in the past two years. Soriet projects in Afghanistan usually score on ono or more of throe points which are valuable in furthering Soriet influence there. These aroi (l) projects facilitating economic ties with the USSR, such as linkups to Rub si an rail lines, and improved roads to therojects which increase Bug si an influence orer important sectors of the Afghan. Soriet control orer Afghan gasoline supply to be facilitated by new Soviet-Afghan piperestige projects which give prominent display to Soriet scccapllahments, such as the paring of 'Kabul streets and tho supplying of Russian buses and taxis. Known projects of combined Soriet and Csoch aid4 totaleddlllon, chiefly on credit. Several projects appear to have been chosenual purpose of providing facilitiesossible invading army and of filling real economic needs of the country.

I. Soriet Bloc Aid Projcctg in Afghanistan A- Transportation and Communication.

There hasajor emphasis on the solution of transportation problems. Afghanistan, almost completely dependent on motor transportation, imports its gasoline. 4. furaAshoder cent of the gasoline requirements and at prices approximately one half of that charged

by Cal-Tox and Bursa Shell. The Seriate have constructed gasoline storage facilities atherlf, Herat. Dagla Arose, Islam Kalo, and are now doing so st Kabul.asoline pipe line is to be built froa the Russian border toherif. Duringhen it was not possible to obtain supplies through Pakistan, the Afghan Government turned toS.R. and Iran for aviation gasoline.

In addition to its invasion of tho Afghan gasoline markets the USSR has given attention to other aspects of the transport sector of the Afghan economy. In4 on agreement was made whereby the Russians would provide credit of overillion for tha purchase of Soviet road-building machinery, trucks and technical assistance for tho paving of Kabul streots. Soviet engineers are to survey two routes for tho construction of alino connecting with the Soviet railway system, and areort which will improve river transport between the two countries.

A five-year Soviet-Afghan agreement on transit questions was signed onhich provides for tho transit of goods over tho territory of tho other.

Tho USSR also haB supplied metal poles snd communications wire sufficient toilometers of telegraph and telephono lines.

U. .Industrial Construction^

The USSR has built an asphalt and cement plant in Kabul which went into operation in The USSR has financed two grain warehouses, a

RB*

flourakery to be built In Kabul. It haaarge cotton gin In Kunduga.

Under the terns of an4 agreement Russian engineers have completed surface geology surveys and are proceeding with core drillings in connection with their explorations of sulfur deposits in Southeast Afghanistan. The Soviets are toenefication plant whichwill be designed toona annually ofcontainingar cent sulfur, chiefly for sale to the USSR. It ha3 also been reported that the Soviets are planning to move into the Dara Suf coal area to develop mines to support the noarby sulfur extraction operations. Coal is reported toritical commodity in the Afghan economy .

Czech loans reportedly are providingementlaaariquetteruit canneryitrogen plant. For the cement plant, which is already under5 million credit was extended and Czechoslovakia is supplying both machinery and technicians to supervise construction and the training of Afghan personnel in its operation.

Other reports indicate that Poland has recently offered to provide materials, equipment and technicians for the Installation of water systems in Kabul and Quandahar, and that Hungary has offered long-term credit for

ihe construction of brick, glass *nd other plants, C Miscellaneous Proioots

5 reports eta to tbat Uio USSR hasorth of aqulpaont for the Kabul Medical School aa wellodicalto organise andealth progrnn.

oreign Trade (Thousands of Dollars)

Bloo

Bloc

China is Ceylon'o aecond best customer, taking abouter cent of total exports This is primarily because of rubber shipments.

Under the teraaive-year contract signed inffective beginningeylon has been shipping0 metric tons of rubber to China in exchangeetric tons of rice. This contract ia renewed each year. China hao boon having difficulty In providing the necessary rico, and, in fact, lagged5 on filling4 contract.

Overall trade between Ceylon and the Bloc has been heavily out of balance with Coy lone so exports consistently exceeding imports. Tho rubber shipments to Chinaajor factor.

It io reported thatJt. has offered to barter Coylonese tea and coconut for machinery and textiles. Inasmuch as Ceylon is seeking opportunities to expand its sales of tea and coconut, this trade would be attractive.

Ceylon ls to receive Soviet eoulpnent. valued0 rubles, under the United Rations technical assistance program, for usealt project. Tho oquipnont will bo carpentry tools. Thereossibility that Russian eoulpnent will also bo receivedealth project.

INDIA

Indian Foreign Trade (Milliono of Dollars)

FXPORTS

Soviet Bloc

r. t

Soviet Bloc

4

e ii

/

/j 19

artially incomplete exports to Tibet.

Sunroary

Bloc countries have accounted for an average of onlyercent of India's foreign trade Trade agreements are in effect with nearly all of the countries of the Sino-Soviet Bloc, but the agreements do not include commitments or quotas for specific volumes or values of any coanioditios.

Duringt twelve months, howevor, negotiations have been In progress between India (both on the governmental and private firm levels) and several Bloc countries regarding tho delivory and sotting upozen or more plant installations in India. If agreements were to be concluded on even half of theseignificant penetration of the Indian economy would have been effected by the Soviet Bloc.

The USSR has had tho greatest success to date, having concluded an agreement for the planning and construction0 million steel and

tho provisionrPllon worth of equipment for it. Tha USSR also has beenontract for ths constructionodern diamond-ore processing plant.

India also iaadadnlstorod technical aid from thahis involves the provision of technical experts and equipment to certain Indian Institutes.

I. Technical

1. 5 India and tho USSR signed an agreement or the construction0teel plant in Bhilai, Kadhya PradsBhapacity of one million ingot tons of steel. The total coat of the project will be0 million. Machinery and equipment to be supplied by the USSR Is estimated to. Black Sea and Baltic ports. In addition, services for preparing the project report and design are valued atillion. Payment is to be made innnual installments with interest atper cent of the unpaid balance.

* Since the USSR made its contribution to the UN technical assistance funds in rubles, they can be utilized only by purchases of equipment or services from ths USSR.

. Final agreement i3 contingent upon Indian acceptance of the survey and plan report and prices. Soviet and Indian engineers have been working at the albaeam of Indian engineers went to the USSR in July to inspect equipment.

2. Ib has boon rehat negotiations were under war ina between the Metal Corporation of India Ltd. and tho USSR for the purchase, planning and installation of an electrolytia sine snelter.

par tod in4 that the

Russians had supplied technical asoietance and capital toirla subsidiaryteel file plant in Calcutta*

i*. On5 Indiaoviet offer to modernize tho diamond mining industry at Panna, Vindhya Pradesh* The Soviets agreed toodern plant capable of0 tons of diamond bearingay. (Russian experts wore engagedurvey of the Panna mines from August to* In connection with this. Industrial diamonds have been listedossible export from India to East Gormany in recent exchanges of trade lettoro* Industrial diamonds presently ara embargoed by CoCom and Russia is seeking new sources of supply.

5- Tho OSSR reportedly offered (sOmetlmao supply electric generatorsotal capacityW. for India's Bhakra, Nangal hydroelectric system, an important part of the current Indian electrification and development program. The value of the gonorators is estimated to be atillion. If turbines are included the value may go aaillion.

6. Tho London Daily Worker reported in5 that tho USSR had offered an atomic reactor and all necessary technical assistance to India.

InsochoSlovakia offered to supply Indiaomplete steel plant, as veil as caustic soda and sugar manufacturing plants on "favorable terms."

U. In4 tbe Woat Qengali gorernment reportedly invitod bids froa Czechoslovakia, Poland snd East Germany for tbe deliveryomplete large-acalo coking plantaily capacityona of dry coal to be valued atU.S. The East Germans attempted to bribe Indian officials through an Indian firm for acceptance of their bid.

The Csechs reportedly expressed Interest (innteel plant In Southern India. The Indian government reportedly is considering the constructionourth steel plant in this area.

In5 East German reportedly bid on constructionigh explooive plant but was expected to lose to an Italian bid.

Inndian firms in Bombay and Madras contacted

East Germany for bids on specified power plantsW. andW.).

5 the Csech Trade Commissioner and twoa Skoda official) arrived In Shillong to arrangevisit by aCsech exports art connection withevelopment projects,the cement factory at Cherrapunji, the Gaubatt-Cnerrapunjithe Brahamaputra bridgo, the Cherrapunji thormal station andsugar mill.

has begun constructionire mill at Patiala and

will furnish specialists.

14. Two Eaat German isiting India offered to supply tho necessary capital equipment required for the expansion project of the atats-owned Mysore Iron and ateel worka. B. l.Ian.7ous

Under the terms of4 trade agreement Bast Germany offored to provide technical services for the Installation and operation of equipment purchased from East Germany.

Unconfirmed Indian press reporto state ln5 that an institute of advanced technology ia to be eatabliahed ln Bombay. The USSR ia said to have offered experts and equipmont for this institute.ussian offer of technicians for the Indian Institute of Technology of Kharagpur University reportedly waa re Joe tod on tho formal ground of inability to speak English.)

The firat official Soviet technical aid suasion consisting

oviet technicians and scientists arrived In Calcutta in4 to work at the Indian Statistical Institute.maller group arrived in All ouch poraonnel areart of the Russian technical aid being administered undor the auspices of.

II. Other Penetration Activities 1. India hasussian made wheel-typo tractors for tost and trial by tho Control Tractor Orsanitation* Two Soviet technicians

-SBflRW

GBUitST

were to train Indiana in the use of the tractors. Satisfactory tests could result in large orders*

2. By undorbiddlng "several capitalist nations'1 Czechoslovakia reportedlyontract for deliveryailroad freight cars, valued atullion, to India, beginning.

3* There hove been aeveral Bloc exhibits of Industrial machinery ln India. Showrooms for the display of moreypes of Russian isachinery and equipment ware announcedull-page advertisement in the Bombay Tfrppndia of Csochoalovakia haa exhibited machinery in Bombay. Polandisplay for the industrial fair to be held In New Delhi thie autumn.

Pakistan Foreign Trade (Millions of Dollars)

Bloo

Bloc

China Isrincipal Bloc trading partner, providing on important market far Pakistani exports of cotton and jute. Pakistan carrieselatively small amount of trade with the USSR end Eastern European Satellites. Raw jute and cotton oro exchanged for coal, groin, cotton textiles, machinery and other nanufaotures.

Pakistan has had trade agreements with several BlocUSSR, Chechoslovakia, Poland andtheao agreements voro allowed to lapse3 and have not been renewed up to the present.

4 the USSR and severe! satellite countries bogan advertising in Pakistani newspapers and periodicals. The USSR advertised varieties of capital goods and cotton textiles of high quality and competitively priced. of tho satellite countries fmmg tho namo of the manufacturers and ropre-oentatlves in Pakistan.

Pakiotan has expreasod Uttlo lntoroet Id technical assistance offers

rendered by tha Slno-Sovlet bloo. 2 Cxech-railrtanl trada agreoceat

included an offer of technical aidut iapleaontation of the offer is unknown. Hungary too expressed an interest in helping with Pailstan's development program. In recent Booths the Pakistani government has beenthe acceptance of tbe OS's offer of Soviet earth-moving equlpaect valued0 in connectionN-assiated irrigation end reclamation projoct in Baluchistan. However, conditions were made by Pakistan to the effect that no Soviet teebnioiana were to be included and Soviet equipment should be standard with adequate spare parts.

Burmese Foreign Trade (Thousands of Dollars)

Tear

Bloc

Bloc

a/

Fiscal year ending/ nclusive.

Summary

Sino-Soviet Bloc countries have been strengthening their economic tioa with Burma in two ways: (l) by providing foreign markets for hor principal exportice, which has been faced with declining markets in Froe-World eountrloa,y offering technical asaiatance and credit.

Both methods involve the importation by Burma of Bloc machinery, whichontinuing dependence upon Bloc aupplies of parts, and which permits tbe influence of Bloc technical personnel who either come to Burma to cdvise and put plants into operation or train Burmese personnel abroad.

In recent years, rice has accounted for about three-fourths the total value of exports.

Although the countries of tho Sino-Soviot Bloo haro accounted for only about one percent of Burma's foreign trade la recent yeare they are setting tho stage for valuable propaganda exploitation byepressed markot condition and by offering technical assistance.

I. Trade Agraemonts with Bloc Countries

Burma signed trade agreements inh Czechoslovakia, East Go nanny and Hungary, in March with China, and in July with tho OSSR.

The Chinese agreement calls for the exportation by China of semi-fabricated steel products and complete sets of machinery and reaving mills. The Soviet agreement, whichurationoars, calls for the annual importationons of rice by tbe USSR against Soviet deliveries of machinery.

II. Technical and Financial Aid from the Bloc

Anatstanco

In5greement was signed whereby Burma willmall spinning and weaving sdll from Communist China. Chinese technicians are to set up the plant and put it into operation',

and Credits

In early summerounsellor of the Chinese Embassy visited Lashlo to Issue loans (provided by Bank of China) to Chinese traders there provided: (l) they display the flag on national holidays (presumably the Chicomend children to Chicomhow allegiance

through participation in civic meetings, and by making' contributionsosigneeo approved by the Chicom. party.

The OSSR reportedly hag extended ten year creditsillion eachurmese businessmen with extensive mining interests. Credits allegedly will be used to buy mining machinery in the USSR. oan of this magnitudeoreign individual is oat of line with previous Soviet practices* The report Is unconfirmed by other. Other

Burma expressed willingness in5 to accept USSR technical assistance under. program. This aid reportedly ia to amountillion rubles and will probably consist of materinle from the OSSR.

The new trade agreement with tho USSR calls for the sending of Soviet technicians to Burma for "appropriatend for tho training of Bumosu technicians in the USSR on machinery going to Burma in exchange for rice.

III. Organisations Promoting Economic Ties with the Sino-Soviet Bloc

The Rangoon branches of the Bank of China and the Bonk of Communications are strongly influenced by Rod China. The Rase arch Department of the Rangoon Branch of the Bank of China has made studies at the request of the Chicom Embassy of Burmese market potential for Chicom consumer goods and of pay rates and privileges of foreign technicians in Burma (to assist the Chicoms in bargaining over rates for their technicians).

East Germany was reported in early5 to berade office in Burma.

Markets for Burmese Rice

Burroie exports of rice5 are expected toetrioono more then* Sino-Soviet Bloc countries mar Import betweennder cent of this total. hina haa agreed toons;0 tonaj0 tone; and the 0SSRons.

Trading

An5 report states that the Chinese Communists have been offering to pay sterling for rubber froa Burma atoercent above world market prices. This report further states that Burma had granted licenses for the exportationons of rubber to China and was considering application for export licenses for anona.

* It is unlikely that all would bo shipped5 since tho Soviet-Burmese agreement callo for this amount between5 and

Connect: Thie report ia not corroborated. Burma ia aware that tho exportation of rubber to China would violate. embargo and make her Inelligible. aid.

.SECRET '

JAPAN

Japanese Foreign Trade (Millions of Dollars)

Bloc

Bloc

share of Sino-Sorlot Bloc countries ln Japan'e foreign trade has been small, amounting to less than two percent over the past four Tears. Trade with the Bloc has not helped Japan's deficit problem since the deficit ln her balance of trade with these coon tries has beengreater than that of her total trade.

A nuaber of Russian tradeare been in Japan for the laat twolre months or mora negotiating contracts with Japanese firms. The fact that diplomatic relations hare not been established between Japan and the USSR has hampered effortsrade agreex-tnt between the two countries.

The principal deterrent to Increased Japaneso foreign tradebe tbe lack ofBloc countries hare

not offered any solution to this difficulty. The USSR has actually aggra-rated the aituation by offering autos and coal at attractive prices while. dollars or herd-to--get commodities In exchange. Thie has resultedituationuaber of Jap firms are strongly attracted

* potent^

tho national economy would not benefit.

PTOOrESIA

Indonesian Foreign Trade (Millions of Dollars)

Bloo

Bloc

Indonesian trade with the Slno-Sorlet Bloc comprisesmall percentage of Indonesia's total trade. However, increased Satellite activity in Indonesia has boon evidencedy the interest in theof trade relations andy increased Bloc offers of technicalIncluding capital equipment and technicians.

Tho ouocessful conclusionumber of contracts for plantby Bloc countries io paving the way for further political and economic penetration of Indonesia and ia providing valuable material for Communist propaganda.

I- Trade Agreomento with Bloc Countries Indonesia hasumber of trade agreements with theSoviet Bloc. 4 new agreements wore signed with Bulgaria, East Germany

-

and Rumania, while agreements wore renewed with Csochoelovakia, Hungary. Poland and Coanraalat China. Indonesian exports to these conn tries consist primarily of agricultural products, while Imports principally consist of machinery, industrial products and textiles.

II. Technical and financial Aid from the Bloo

An in teing development In recent Indonesian-Uloc tradehas been Satellite offers of technical assistance to Indonesia.illingness to export complete plants and iao^mslsmflsmml and to provide technicians for ths operation and maintenance of these installations. Poland and Czechoslovakia have also offored to provide technical assistance to

Assistance

1*ontract was5 between Indonesia and East Germany for the cocstruotionugar factory by East Germany. The coat of construction isillion which is to be repaid In kindix-veer period. East Germany will send fifty to sixty technicians to assist in plant construction ond operation.

2. An Indonesian-Romanian agreement was4 which provided for technical assistance by Rumania for the constructionement mill, the drilling of oil wills and tho exploitation of mineral deposits.

3* Complete installations comprising aa electric power plant, a

40UKbT

factory for radioharmaceutical plantaotory for email and maituo-alaed agricultural machines will be built for Indonesia by0 Czechoslovakia will alsoood research laboratory In Djakarta In the fall

4. Three Hungarian engineers arrived in Djakarta in4 to discussffer toract hydroeloctrio and die sal plants.

5* Indonesia ordered equipmentanvas-producing factory from Czech at the Djakarta Pair. Csecboalovaklan technicians will assist ln the operation of the mill, five new loons of Czech manufacture were installed in the mill with the assistance of tha Czech technicians who had demonstrated the maohinory at the Pair. C. Loans and Credits

Information In5 reported that tho USSR and Indoneaia had reached an agreement ln4 under which the USSR wouldarge sum to Indoneaia in the form of weapons, arms and machinery. Thie loan would bo repaid by Indonesian petroleum, coconut and rubber.

In recent months several Satellites have offered long-term credito to Indonesia. In5 China offered Indonesia long-term credits in the form of capital goods for the construction of textile mills,installations and cement factories. In5 both Czech and Poland offered long-term credite to finance dolivoriee of capital goods to Indonesia.

Recent information has reported that tho Soviet and Chine ae ombasaloa were bringing gold into Indonesia in5 for sale on the open market Tho Puyeiah gained froa those transactions were being usod to finance some of their aotivities.

Argentine Foreign Trade (HlUlona of Dollars)

Bloo

:

Argentine trade with the Soriet Bloo baa booa increasing rapidly. Tba major Bloo traders ore the USSB, Poland, Hungary end Caochoslovaxla. Recent trade agrea-aente bare contained large provisions far the export of capital goods froa the Bloo. Bloc equipment and technicians are being providedew> Industrial projeots.

. and Argentinene year trade agreement3 /or the exchange of goods reined0 million both ways, including aSoviet credit for machinery valuedillion. Bueflln fulfilled its pert of tha first trade agreement fairly well ln everything except machinery. An Argentine mlaslon wont to. in3 to investigate what goods wore available. Nevertheless moot importers were unablo to Import auch machinery

una.or towns of ins agreement due to lack of couonmlcatloa with Soviet suppliers and lac* of information concerning available Soviet machinery. Brochures doocriclnc available machinery were provided but they were written in Russian. In ardor to overcome this complicationJt.rade fair in Buonoa rtires in May to display Soviet heavy machinery. This drew largeechnicians ssy that the equipment is out of date and badly made* but It appears to bs favorably received by tbe general public. In5 it vasthat tho Soviets wore negotiatingarge quantity of Argentina's surplus linseod oil. In5 trade was still continued under3 agreement with nn exchange valued0 million provided

A throe-yoor trade agreement between Argentina and Czechoslovakia, signedontemplated aggregate trade both ways equivalent tomillion. The agreementeciprocal credit available to either country4 million. Provision Is made for Argentina toillion of capital goods during tbo firot year. At the beginningsochoalovokin owedillion under the provisionsrevious agreement

Argentina end Kent Germany enteredompensation arrangement in

4 which contompletea trade in both directionsillion.

A apw Argentine-Polish Trade Agreecent, signedovers total iredo vmlMdwaysillion. At the beginning4 Poland oired Argiotii* the oquivalent ofmillion under1 agreement,

In5 tho Argentine Ministry of Industry anncunced that Creche williodorn coal-iawning plantally oapacityons at tho fiovarunout owned coal mlnoa ln southern Patagonia. Tho cost of installing tho plant tad putting it into operation ia eetlnated at1 aillion to ba financed under the Argentine-Czech trado and poynenta agreements. The USSRld eiaing machinery for use ln these clnos.

Eoet German lnteroate reportedly are workingesignefrigerating plant for Argentina.

It was reported in June that the Czechs had contracted for the delivery ofillion worth of truck chassis to Argentina.

A delegation of Soviet aclontleta aad technicians was scheduled to go to Argentina Jn5 toories of lectures on tho technological developments in. end Poland. It nayermanentliaison committee ln Argentina. Also, theated Association of Scientific Workers plana to set up Latin American lioedquortera ln Buenoa Aires and to camouflage the activity aa an Argontino tr&dlng company.

BRAZIL

Braallian Foreign Trace (Millions of Dollars)

Bloc

Bloo

with the Soviet Blocegligible portion of total Bra tl Han trade, but It ls rising rapidly. Czechoslovakia accounts for over half of the Brazilian trade with the Bloc thilo Poland is the second largest Bloc trading partner.

The Czech conrorclal attache in Brazil works closely with the Brazilian organization EBFCI (Brazilian Office for tho Development of International Trade) in planning and carrying out activities to facilitate and promote Brazilian trade with the Soviet Bloc.

CHILE

Chilean trade with the Bloo is vory snail, but it is rising rapidly. Inpc.-ts Junpedhousand35 thruwnd Exports, which wero only ClCO thousand9estinations were Poland, Csachcslovakla, and Hungary. Certain left-wing Chilean natlonaln have been suggesting that tho Soviet Bloo setrade agency In South Anerlca and that it buy Chilean copper at premium prlcee.

Chile is to receive united Nations technical assistance, valued0 thousand, financed by the Rasa ion contribution to the fund. This will consist of Russian and Czechoslovak technical oqulpaont to bo used in schools. ompetent Chilean will be sent to Europe to choose the equipment.

Cuba'sith the Soviet Bloc has, until this year, bean very aaall amounting to coBiowhet less than tl million either way. Poor sugar crops in tho Ukraine and Contral Europe4 prcetptod Bloc countriesthe USSR) to become principal outlets for Cuban augerhis caused the Cuban sugar industry tooon rather than the expected depressed market*

Tho Czechs have made overturoo for tho establishmentermanent trurio Mission in Cuba and alsohreo-can dolegation in5 to study the prospects for sales of Czech eugar-refining equipment and other machinery.

tabu: I

Plans installations tad Miscellaneous LtmXojxmVt Projocta by Giro-Soriet ELoe Countries io tho Pre* World

Country

Con" iderai. loo (lunar plant

electric rater iala plant Blase plant paper plant lucbor rd.U

for

power plant

coal mines

uoter supply

rilling of oil walla (Sumatra)

electric pouor plants radio factory pharmaceutical plant agricultural BMaa^MBf textile plant auto aaaesnly plant food research lab

enacOine pipe-lino

road ccnauructlon

railway conetruotlon

aapbalt ana ooasasi plant

cotton nil!

flour adll

2 grain storage

Syria

blgl&ay coontruetion sugar refinery boiler plant hydro-electric atation ory-battcry factory

bakery

eulphur plant cement plant glaaa factory briquette plant fruit cannery nitrogen plnnt

CAScnt plant

continued)

Country' India.

Turkey Iran

Argentina

Oader CoDeldcrctloc

clec-trolytie sine szclter file plant

power plant* (aeveral) nuclear reactor

ateel plants caustic eoda plant eugnx aal3 coking plant ezploelTee plant

cotton thread anils ceraactca factory cotton adll

refrigerating plant

reinforced pipe and

concrete pole factory nuclear reactor triage

ceaaarc plant

one Jeer reector udIeovb (aeveral)

oil refinery

Contracted for

steel

processing wire adll

sugar refinery factory of unJaoun type

coal vaahing plant

ehoe factory

plant

FREE WORLD COUNTRIES" TRADE WTTH THELOCESCan OF TOTAL TRADE

than 1

10

Chile Coles* in Cuba

French Went Africa

Kenya

Mexico

Kong

French

German Federal Republic UruguayCoast

nd Hyaaalond Spain

Tuniala

Onion of South,

India

Indo-ChinaIndo'icaia Iraq Israel

Italy (plus Trieste)

Japan

Lebanon

Halaya

Better lands

Hew Zealand

Portugal

Sudan

Syria

* EetlMftted on basis of incomplete data. ** Based on imports only.

United Kingdom Yugoslavia

Original document.

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