SOVIET ECONOMIC ASSISTANCE TO ITS SINO-SOVIET BLOC COUNTRIES (SC RR 103)

Created: 6/13/1955

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Dissemination Authorised

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Office of Current Intelligence

5 No.8

SOVIET. ECONOMIC ASSISTANCE TO THE SINO-SOVIET BLOC COUNTRIES

IA HISTORICAL JB/IEW-fiROSRAMAS

Office of Research and Reports CENTRAL INTELLIGENCE AGENCY

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CONTENTS

Page

I.

II. Media for Economic

for Economic Mutual

for Scientific and Technical

Stock

Projects

III. Soviet Economic Assistance to Bloc Countries

I . Communist China

Joint

Soviet

roject Soviet Aid Program

Soviet Long-Term Credits to Communist

J . North

- in

Pan

A. Comparison of Soviet Credits towith US Grants tounder the European

Appendix B. Gaps in Intelligence

Appendix C. Source References .

Tables

7 79

Terms of Scientific and Technical Cooperation

Protocols between the USSR and Selected Soviet

Numbers Used by Tekhnoeksport. Moscow,

for Shipments to Albania, Bulgaria, Rumania, and Communist China,5

3- Soviet Credit Extensions to Satellite

4. Polish Industries and Plant. Rec'eiving Aid from thc USSR . . .

Industries and Plants Receiving Aid from the USSR

Technical Assistance Payments by Bulgaria to the USSR Through Account

- iv .

Industries and Plants Receiving Aid

from the

Industries and Plants Receiving Aid

from the

Industries and Plants Receiving Aid

from the

of Soviet Advisers and Technicians

Sent to Communist China, 3

Communist Industrial Projects Receiving

Soviet Equipment and Technical Aid by Industry,

4

Communist Project* of the Ferrous Metals

and Electric Power Industries Receiving Soviet

Equipment and Technical

ORR)

SOVIET ECONOMIC ASSISTANCE TO THE SINO-SOVIET BLOC COUNTRIES*

Summary

6 it is estimated that thc USSlPhasillionf credit to other countries of the Sino-Soviet Bloc. Of thisotal of7 million was.extended to the European Satellites,0 million toChina and North Korea. In addition.^he USSR has made an outright grant0 million to North Korea. These credits were extended to the Satellites to finance commodity imports,ercent of which were to be supplied by the USSR. Of total creditsotal of at0 million was for capital equipment from the USSR,otal1 million was for food and raw materials from both Soviet and other sources. The commodity composition of thc6 million has not been determined.

Poland has received the largest amount of Soviet4ollowed in order by Communistastndhc major portion of the credits to China and Poland are fordevelopment, whereas those to East Germany and Czechoslovakia, which have highly industrialized economies, are largely for the financing of imports of food and raw materials.

* This report represents the best judgment of ORR as

ollars throughout this report are current US dollars al official exchange rates.

In addition to extending credits to thc Satellites and the grant to North Korea, the USSR apparently has established organizations to facilitate thc exchange of students, technical advisers, and technological data between itself and Sino-Soviet Bloc countries. Moreover, thc exchange of data on patents and technological developments is made, according to Soviet sources, without charge. Soviet advisers are known to have been prominent in all major economic enterprises in the Sino-Soviet Bloc, although in the European Satellites their number appears to be decreasing. It is difficult to assess the influence of these Soviet advisers on the economic development of the Sino-Soviet Bloc, but it can be assumed to have been of major importance.

F

I- Introduction.

Any discussion of economic aid provided by one country to another, to another group of countries, must be precededefinition of what conatitutes economic aid. The term is so goneral that it may encompass numerous activities. Thia report avoids relatively abstract discussions and concerns itself with the more concrete forms of Soviet economic utright gifts of currencies orrovision of currencies or materialseferred payment basis;echnical aid, including personnel, documents, and matcrialu.

Excluding aidilitary nature.

BLANK PAGE

II. Media for Economic Assistance.

A. Council for Economic Mutual Assistance.

In9 the Council for Economic Mutual Assistance (CEMA) was formed for thc purpose of coordinating the economic planning of the Soviet Bloc countries as well as the economicamong them. The original members of the Council were the USSR. Poland. Czechoslovakia. Rumania, Hungary, and Bulgaria. Albania was admitted to membership innd inast Germany also was admitted. Recent informationthat North Korea and Communist China have close links with CEMA and that.programs of economic and_technical aid to these

2/

countries are carried out under the generaPsupervision of CEMA. although there is no conclusive evidence that eitherember.

The functions of CEMA as stated kn its Protocol are as follows: ) To coordinate the economies "of theingle plan prepared by theo encourage complementary development of thc natural resources of members.

o

to improve the materials supply of the member countries.

to 'exchangeo standardize production ando provide stable markets,o/ Because the USSR is thc initiating and dominant member of the Council, it follows that thc Council must be consideredmedium used by thc USSR for transmitting economic assistance

other Soviet Bloc countries.

CEMA consists of representatives from each of the member countries who meet whenever necessary, but at least quarterly. The daily operations are conductedermanent Secretariat in Moscow which has the authority to make decisions, but these decinions are subject to ratification by the Council. Delegations to the Council from the member countries are reported lo be headed by theof thc respective State Economic Planning Commissions. The

serially numbered source refcre

1

Ministry of Foreign Trade is usually represented in each delegation by cither the Ministereputy Minister. 4/

The CEMA Secretariat (sometimes called the'Executive is reportedly staffedpecialists (presumably pro-fenstonal-classf whom aboutercent are Russians. To the Secretariat, each member country sends one permanentwho is accompaniedtaff probably composed of clerks and technical advisers. 6/

It has not been determined whether CEMA maintains its liaison with the Soviet government through thc Soviet Ministry of Foreign Trade or the State Planning Commission. Although the Soviet personalities in CEMA activities areTflmost completelyMolotov, Kosygin, Mikoyan, and Saburov have been reported as heading the Soviet delegation. 6/

From the economic point of view. CEMA exists mainly to implement Soviet policies for Soviet Bloc trade and Bloc economic planning. The Secretariat, which ia located permanently in Moscow and staffed predominantly with Soviet personnel, is the dominant force in the CEMA organization. All functions of the Council are conducted pursuant to proposals initiated by thc Secretariat. The duty of the signatory countrieu to make information available to the Council and to accept and follow the Council's recommendations in an obligation to the Secretariat and not to the Council. The Satellites also must send to the Secretariat monthly reportstheir production and other economic and financial information, 7/

Planning in the European Satellites is becoming morein the Moscow CEMA apparatus. Economic cooperation has advanced toegree that the Satellites are now ready to embark upon coordinated Five Year Planslans in which CEMA has apparently had considerable voice and mayignificant degree of control. 8/

Although Communist China and North Korea are not known to be members of CEMA, evidence indicates that if they are not.

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the trend is toward membership. Should Communist China beto follow lines of economic development contrary to CEMA plans, great difficulties would bc createdino-Soviet Bloc-wide program of economic cooperation. If China should join CEMA. it probably willuch less subordinate status than do the European members! 9/

In addition lo the planning functions of CEMA, it will be shown in other sections of this report that the Soviet intentions to "exchange experience" and to arrange international loans, as expressed in the CEMA protocol, are also being carried out.

B. Commissions for Scientific and Technical Cooperation.

Commissions for Scientific and Technical Cooperation (CSTCJ have been set up in the USSR and in each of the Sino-Soviet Bloc countries. These commissions handle exchanges of plans and blueprints,on technological developments, and technical advisers and/ It is assumed that these commissions fall under thc general supervision of CEMA, since their activities coincide with function number four of the CEMA protocol. *

In each Sino-Soviet Bloc country the Commission forand Technical Cooperation is divided into national sections,ection for each of thc other Bloc members. Thus within thc Soviet Commission there arc sections such as the Soviet-Rumanian, Soviet-Polish, and Soviet-Bulgarian, and within the Rumanianthere are sections such as the Rumanian-Soviet, Rumanian-polish, and Rumanian-Bulgarian. U/ In addition lo the national sections, it appears that there are also coordinating committees established on an industry basis, through which thc exchange of technical data and personnel for particular industries is facilitated.

The Soviet Commission signs annual protocols with each of the Satellite Commissions.** These protocols specify in rather

* See A, above.

** Similar annual protocols also are signed between the various other pairs of Soviet Bloc countries.

7

general terms which arcao of tho economics of the Satellites will exchange teennical aid with the USSR. The major portion of this technical aid flows from the USSR, but apparently the USSR is willing to accept technical advice from those countries which are more highly developed than the USSR in certain industries or in particular phases of industrial processes.

Soviet propaganda concerning the technical assistanceinvariably boasts that exchanges of plans, technological data, patents, and licenses are made without charge. The salaries of technical advisers and coats of maintaining and instructing trainees apparently are paid for by the recipient country. *

Tablehows thc substance of technical and scientific cooperation protocols in effectetween the USSR and selected Soviet Bloc countries.

C.

In the All-Union corporation, Tekhnoeksport, the USSR has an organization specifically designed to manage the exportation of capital equipment and supervise its installation abroad. Specifically. Tekhnoeksport provides plans, drawings, supervisory personnel, and complete equipment for new projects abroad. It also reconstruct! and modernizes existing plants in Ihc following industries: metallurgy, chemical and pharmaceutical, machine-toolautomobile and tractor production, agricultural machinetextiles, foodstuffs, cotton growing, timber and paper, building materials, hydrotechnical works, communications plants andstations, steam power plants, and hydroelectric stations.

It appears that Tekhnoeksport procures the services of specialists from the appropriate Soviet industry for thc projects which it supervises abroad. There are indications also that Tekhnoeksport takes some part in arranging for training of the workers who are to undertake operation of the installations after**

,* ollows on p.* Continued on p.

- 8

General Term* of Scientific and Technical Cooperation Protocols between the USSR and Selected Soviet Bloc

Signed and Session of the Joint Commissions Bloc Country at Which Signature Given

Poland

Signed tn Moscowt 7th Session of the Soviet -Polish Commission.

East Germany

Signedcow in4 atession of the Soviet-German Commission.

Aid to Be Supplied by the USSR

Technical aid Cor designing and building civil endprojects; data on production techniques in the metallurgical, machine tool, textile, and food Introduction of new kinds of production, and technical advice on important nationalproblems.

Technical blueprints for metallurgical equipment and some types ofmachinery; data on certain metallurgical processes for production in the machine-building, chemical, and other Indoctrination of German specialists in certain branches of Soviet industry and agriculture. Soviet specialists totechnical advice In designing rollingon methods offor ore, on production of lubricants, and other tasks.

Technical Aid to Be Supplied

to the

Technical advice onof railroad lines and installations, onof mining andtransport equipment, and-on chemical production and coal mining.

Indoctrinationroup of Soviet specialists in German achievements in the mining, machine-building, and light and foodstuffs Industries

General Terms of Scientific and Technical Cooperation Protocol* between the USSR and Selected Soviet Bloc

c I

Signed and Sassion of the Joint Commissions at Which Signature Given

Signed in Moacow in4 at 5th Seeeion of the Soviet* Bulgarian Commission.

Technical Aid to Be Supplied

by tho

Blueprints of food industryechnical data on the production of agri-cultural machinery and tools, rolling of ferrous metals, and products of thc food Induatry and other light industries.

Indoctrinationarge" group of Bulgarianin Russianin agriculture and industry; Soviet specialists to assist In Solution oi Bulgarian agricultural and mining problems. ,

Technical Aid to Bc Supplied

to the

Soviet specialists will be briefed on Bulgarian achieve-menu in the field of legu-minoue crops and the process ing of fruits and vegetables.

in Moscow In4 at 5th Session of

the Soviet*Hungarian Commission.

Exchange of documents on investment In industrial centers, technological advances In industrial production, and health faculties.

Indoctrination of Hungarian experts In Soviet scientific and technical achievements in various sectors of the Soviet economy; Soviet specialists to provideadvice.

Exchange of documents on in-vestment in industrial centers, technological advances in industrial production, and health facilities.

Li. Joint Stock Companies.

Tho joint stock companies which the USSR has formed in Rumania, Hungary. Bulgaria, Communist China, and North Korea have in most cases been organizations through which the USSR has been able to guide and stimulate thc development of certain areas of these countries' economies lo the benefit primarily of the USSR. In certain respects, however, the USSR haa provided limitedassistance to its partners through the joint companies.

Confiscated former enemy properties have, for theformed thc basis for the Soviet contributions to the joint The Soviet interpretation of what constitutedassets wasery free one, with the result thatof the Soviet actions in many instances is

Standard clauses of agreements establishing joint stock companies exempt these companies from taxes, allow independent use of foreign exchange, guarantee the USSR an annual rate of profit, and establish their priority over other companies for raw materials, equipment, and labor. Consequently, the companies

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jointly owned with the USSR initially have developed more rapidly and operated more efficiently than othere.

The USSR has recently beenolicy ofits "hares in joint companies to their parent countries. Between September and4 the USSR returned to Rumania, Bulgaria, and Hungary the Soviet shares in nearly all the joint companies in those countries. The exceptions are the companies controlling the oil industry in Rumania, and uranium mining in both Rumania and Bulgaria. All of these have great strategic value. The joint companies in Communist China, which, since0 Sino-Soviet Mutual Assistance Treaty, had been operated on more of an equalitarian basis "Than those in Eastern Europe, were to revort wholly to Chinese ownership The status of the three joint companies in North Korea is not known. The USSR is to be reimbursed for its shares in all of those companieseriod of years at terms which Soviet sources describe as

, Thc extent to which these joint companies can be considered media for Soviet economic assistance to the Bloc countries depends upon three factors which at thia time cannot be accuratelyhc degree to which the beneficial effects of priority treatment for the joint companies overshadowed the detrimental effects of this priority on nonjoinlhc extent to which Sovietin these joint companies was real investment,hc difference between the sale price and actual value of the Soviet shares.

FT. lnduotrial projects Commission.

There is reported toino-Soviet Industrial Projects Commission operating in Manchuria for the purpose of directing the industrial and civic development of central and northern Manchuria. According to the reports of White Russian refugees from Manchuria, this organization was established2 with headquarters at Harbin. It ie alleged to be responsible for the planning and supervision of new construction and for the arrangements to obtain the necessary advisers, technicians, plants, and equipment from the Soviet Bloc. The

-

technicians employed by the Commission Include Soviet Russians, Chinese, and White Russians.

Information on this organization is confinednd toreport

ZZjoint Sino-Sovietsame referred to here as the Industrialwhich was to controlercent of ManchurlanUSSR was to fill thefor iheears, and the position would be Although tho lack of information on thisa wider range of sources raises some doubt as toommission wouldogical body tothedplanning necesaary to effect the Sovietfor. the industrial development of Communist China. particularly to the program for Soviet assistance in renovation.and construction ofarge projects, whichreceive Soviet aid. *

Continued on

III- Soviet Economic Auoiatance to Bloc Countrico.

A. Poland.

oland has been the recipient4 million worth of credit from the USSR, an amount equal to more than half the total credit extended to the European Satellites. The major credit agreement between the USSR and Poland as shown in0 million worth of credit. Another major agreement waa0 million in crodit. No new credit agreements are known to have been signed since

r

In addition to equipment aupplied'a'n credit, the USSR has assisted Poland by providing plans, patonts, and information on technological advances free of charge (see 1olish specialists received training in thehis number was in addition to those who Were given special training in the operation of complete industrial unite being provided by the USSR.

, During the past few years the USSR has provided equipment for more thanolish factories, plants, mines, and electric power Perhaps the outstanding Soviet-aid project in Poland is the Lenin Metallurgical Plant near Krakow, tho major investment of the Polish Six Year Plan. Betweenndercent of the machines and installations for this plant, which is estimated to cob!0rc reportedly being supplied by the USSR under the terms of the8

* indicates and describes Polish industries and plants known to be receiving aid from the

* ollows on* P. ollow* onontinued on

Soviet Credit Extension* to Satellite

aland

N.A.

stelllte Country Date of Agreement Effective Dates Amount

7

N.A.

Emergency loan in8

il. lion

8

ngiry

0

N.A.

N.A.

November or4

A gold loan to cover import of raw materials and capital goods,

etricof gtain on credit.

Capital goods from the USSR,equipmentmillion steel "mill.

For purchases of industrialfrom the USSR.

Equipment and complete plants to be delivered by the USSR.

Credit reportedly in tha form of vanadium, chrome, cobalt, andgoods.

Terms o!.

Repayment in commoditiesear.

Three-percent interest. At end of sxch year. Poland mus: execute notes of Indebtedness for amount of credit used in that year. in goods at world pricesear periodear* after execution of notes.

N.A.

N. A.

N.A.

throughout this report are given in metric toaa.

Table 3

Soviet Credit Extension* to SatelliteContinued)

eUite Country Date of Agreement Effective Dates Amount

N.A.

ecember

8

49

9

Probably long-term

Short-term, emergency

financingfrom the USSR. Interest rateercent per year.

USSR loanedgold and free currencies.

Textile production re-allocated from Czechoslovakia to USSR from first9 to

Sixty percent in gold,ercent ln For financing raw materialfrom the West

For financing raw material imports from the West.

Payment byonths beginning not iater then Pay. ment to be in goods or in gold or convertibleIf agreed by bothj parties.

Czechoslovakia to repay with oil and iron mining equipment and other manufactured goods.

interest.

N. A.

N. A.

Table 5

Soviet Credit Extensions to Satellite

Continued)

illlte Country Date of Agreement Effective Dates

N..

10 ie2

ulySeptember

N.A.

November or4

35 million

5

illion

rate.

2 percent. Interest rate,

2 percent. For food and ra*

materials from

theillion ln

foreign currencies,

remainder in good*

from the USSR.

Credit may be drawn upon ln any d% siredand will probably he used for the purchase of industrial goods, machinery, and consumer goods

Interest paid ln maier;*ls

0o be covered in second

half

N. A.

Two-percent interest. Repayment5 and completedears thereafter.

N.A.

7

To end7

N.A.

tons of grain valued atil-lion.

N. A.

illion USSR Repayment in kind plus

5-percent interest.

Repayable in commodities in four equal, annua! installments.

Table 4

Poltah Industries and Plants Receiving Aid from the USSR

Metallurgical

(Nowa Huta)

HuU Bit rate

H-t*l

Remarks

Callsd ths Nowa Huta Plant until4m east of Krakow, Eighty-fivea/ of machinery and equipment, as well as the complete engineering plans, were to beby the USSR. Some elements of the comblnt began production Lenin is scheduled for completion7 and is toamplstelygrated combineapacity of fromtons loillion tons of pig iron. il* lion tons of steel.andillion tens of rolled products.

Formerly known as the Cxestochow* iron and Steel Plant and as the Rakow Steel Plant. Located at Ccestochowa. An existing small plant is being remodeled Into the second largest steel combtns in Poland aa part ofix Year Plan. Facilities jjre toodern coke plant with byproducts-recovery installations, four blast furnaces, an ironumbsr of open-hearth furnaces,odern steel foundry and rolling mill. The USSR is supplying plans and machinery for some of the installations. is scheduled5 hut probably will not be ready. Toteel capacity ofillion tens.

Planned touplicate of the Lenin Metallurgical Combine aad to be constructed as part of the Five Year Plan beginning To be located neat to Ihe Lenin Combine. The USSR probably will provide some advisory and material assistance-

Another source has stated that the USSR had planned to supplyercent of the machinery and equipment but later reduced its share toercent.

Polish Industries and Plants Receiving Aid from the USSR

(Continued)

Remarks

(Continued)

Power

ka

mill. Steel mill.

High-quality steel-plate plant. Aluminum plant.

Hydroelectric power station at Bobrowice. USSR furnishing equipment, most of which is original equipment removed by the USSR at an earlier date. Installed capacity estimated

Power plant. USSR presumably supplying allassistance and equipment. Installed capacity Is toegawatts by the end4egawatts

Power plant. Plans provided by East Germany, but technical assistance and turbines beingby USSR. Installed capacity4 Lsegawatts but is to be increased toegawatts by end

plant

Nitrogen fertilizer plant Carbide factory Synthetic acetic acid plant Synthetic rubber plant

Piotrkow 4W

Cotton spinning mill at Piotrkow, Lodz Voivodship. USSR providing unknown amount of assistance.

Cotton spinning mill at Zambrow, Bialystok Voivodship, Majority of spinning machinesby USSR. Began operations

IX the reportoviet loan amounting0 million li correct, then Czechoslovakia has receivedn credit from the USSR71 (see TableLessillion of credit, however, was extended for the financing of imports from the USSR. Because of the advanced state of development of ite industry, Czechoslovakia has notnd in truth has received but relatively littlecapital equipment and technical aid from the USSR.

A metallurgical plantoundry combine at Kunice are known to have been supplied with modernunder the guidance of Sovietnd thc Czechoslovak coal mining industry has received Soviet equipment and technicalnechnical assistance agreement for chemical factories was signed with the USSR, but details are not

Germany.

Between0 andast Germanyreceived slightly more4 million of credit from the USSR (see 9 million of thie credit was granted in July andargely to finance the importation of food and raw materials from the USSR. oan of1 million in any desired currency waa reported int is believed that this loan will be used for the purchase ofgoods, machinery, and consumer goods. As in the case of Czechoslovakia, the level of the industrial development of East Germany is high relative to that of the USSR. Therefore, raw materials rather than capital equipment have comprised the major portion of commodities received from the USSR on credit.

Two-way exchanges of technical data have been carried out in the past and are to be continued. he USSR is to supply

" P.bove.

-

Edit Germany with technical blueprints lor some metallurgical equipment and (or some types of agricultural machines, as well as technical data on metallurgical processes for production in the machinery, building, chemical, and other branches of industry (see.

Soviet investment in East Germany has, by and large, amountedegative sum. In5 the USSR orderedf the largesl and moat important enterprises, with an estimated current value of overillion be transferred to Soviet ownership. Subsequently) these plants, which are known by the abbreviation SAG (Sowjetisehe or Staatlicbeaid thcearly rental on propcrty_and installations, as well as their profits, if Seventy-four plants wereto East Germany3 were returnedndn

ovc r

Soviet properties accounted for about one-third of total East German industrial employment and output. This proportion was retained, with thc growth in the value of retained properties exceeding the value of returned properties untilhen the proportion dropped toercent. Under economic concessions granted in3 the USSR cancelled East German reparations payments at the end3 and returned all but one of thc Soviet enterprises to East German ownership in The one exception is the Wismut AG uranium-mining company which reportedlyoint Soviet-East German "Thc USSR has apparently received compensation payments from East Germany for what may beas two-thirds of the value of Soviet enterprises turned ov to East Germany before The remaining payments for these enterprises were officially canceled at this time,pensation was required for the latest

no com

D. Rumania.

Credits to Rumania from the USSR appear to have been small and infrequent. Apparently, onlyillion loan of

* P.ove

-

I'M/ dr .my .iHowanc* iu: capita! good*, tUmini 'icdit having consisted entirely of wheat valued atillion (aee Tabic

The major Soviet economic influence in Rumania hae been thc joint stock companies known as the Sovroms. These Sovroms, which dominatod every vital sector of the Rumanian economy, were nominally jointly owned on an equal basis by the USSR and Rumania. Actually, however, the Soviet contributions did not measure up to those of Rumania, the Soviet shares having been composed of assets acquired on tho basis of very loosely defined German control. The USSR wasertain.level of profits from these joint companies. The "investment" of the USSfTln the companies waa largely accompliahed by reinvestment of the "profits" accruing in its

early all of thc Sovroms-were returned to Rumania, which must pay for the Soviet shares in these companieseriod of several years. The USSR retained ita aharea in Sovrompetrol, which controls Rumanian oil production, and in the Soviet-Rumanian Quart/.ite Company, which mines uranium ores.ovrompetrol is thc country's most valuable industrial asset.

Soviet assistance in the reconstruction and development of the Rumanian economy has been concentrated on the basic oil. mctallurgi-cal, and power industries, but the lighter industries have also been receiving considerable aid.

ndicates and describes Rumanian industries and plants receiving aid from the USSR. It has not been possible toin all cases which plants have been jointly owned, but it ia probable that most were under joint control.

P. bove. ollows on Continued on

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Table 5

Rumanian Industries and Plants Receiving Aid from the USSR

Remarks

that Tekhnoeksport is assisting in the constructioneavy industrial ob"yekt* ,

. ln the rearhe USSR

is to provide the entire equipmentetallurgy cal coking planton annual capacity, together with agglomerating equipment for iron ore and large-eapacity rolling equipment for sections and tinplate. The plants described belov. are believed to be receiving various amounts of assistance from the USSR.

Steel plant. Two of (our old blast furnaces have been reconstructed to increase capacity. oven coking plant, addedoubled the plant's coking capacityons per year. OpejJ-hearth capacity8ons was later Increased by the additionurnaces. 0 production was reportedons of pig ironons of steel.

the end of World War II the followinghas been done at thislast furnaces have been rebuilt andew blast furnace was addedtton open hearths have been enlarged, coking facilitieson capacity are being installed,ew rolling mills have probably been completed. The plant's production of tabes (or oil wells and the natural

ndustries and PUnta Receiving Aid from the USSR

(Continued)

ry_

Heavy

(Continue d)

PUr.:

(Continued)

y

Steagul

Blear 6S/

amarki

gaa network ia of great value to the fuel8 production is reported to haveons of pig ironons of steel. by Sovrom Metal.

Produces pig Iron. Onelast furnacs has been rebuilt and enlarged. ew blast furns.ee was recently put into operation. Combined capacity of both furnaces0 tons.

Metallurgical plant at Brasov.

Tube-rolling mill at Bucharest.

at least IS power ob' yekti

are being assisted by Tekhnoeksport. at Moreni, Ovidiu, and on the Black Sea Canal project have been identified

r. .. . ). 0 Rumanian

power capacity was0 megawatts, buttoegawatts by the end

Hydroelectric plant. Construction began1 and has progressed slowly, the USSR providing the machinery. Planned capacity reported toegawatt*5egawatts

Hydroelectric plant. Scheduled for completion Reported to be in partial operation in3 and In full operation at endlanned capacity,egawatts.

Rumanian Industrie* and Plant* Receiving Aid from tho USSR

(Continued)

Remark*

(Continued)

Chemical

Commur.icat-.on*

Textile

plant began Reported in full operation by the end Twenty-four-mega-watt capacity.

at least eeven ob"yekts ar*

receiving aid frome. An unknown project at Ploeati and at leaat one nitrogen and soda plant have been identified.

Chemical combine.

A penicillin plant. Complete installation reportedly acheduled to be aupplled by the USSR. Plant to employorksra upon completion.

Sixteen ob"yekt* are receiving Tekhnoek*port aid (see. Radio station*able plant have been-4enUtlvaly identified.

Seven oVye/jcte are receiving Tekhnoeksport aid (see. ynthetic sole factory at Buzauloth factory have been tentatively Identified.

Light and industrial machinery

spinning mill.

Twenty ob"vekt* i

A augar plant, powdered milk plant, and two machine tool plant* identified.

It is not known what form of technical aid is paid for by thc Ministry of Finance, but, since the Ministry ot National Defense presumably handles military aid, it does not seem illogical to assume that the remittances from the Ministry of Finance are for technical aid of an

economic nature.

An agreement signed in October4 provided for the transfer to Bulgaria of Soviet share'sfoint stockin Bulgaria. The returned companies are KORBSOTABSO (Civilnd SOVBOLSTROY (building materials). No mention was made of the Soviet Bulgarian Ouartzile Company (uranium mining). Bulgariao pay for the Soviet shareseriod of years. &Zf

By assisting in the constructionew select enterprises, fhc USSR hasaluable contribution to the basic industrial

- 40

complex of Bulgaria. The V. 1. Lenin Works, built largely with Soviet equipment and under Soviot direction al Dimitrovgrad, is thai country's first and only steel mill. In addition to enabling Bulgaria toteel industry, the USSR has alsoignificant role in the construction and improvement of power installations, which arc essential to further industrial development. Bulgarian agriculture hasonsiderable amount of Soviet assistance in the form of Soviet advisers,were provided by the USSRndarge nitrogen fertilizer plant atndicates and describes Bulgarian industries and plants receiving aid from the USSR. 1

F. Albania.

Tho USSR extended an unknown amount of credit to Albania in1 (see. Since thatumber of Albanian plants have boon receiving capital equipment under this agreement, which extends credit

The USSR has made no effort toetallurgical industry in Albania and has helped to develop only one small electric power station. The major portion of Soviet aid has been directed to such developments as the CerrikOil Refinery, the SlalmTextilc Combine, and other smaller light industrial plants.ndicates and describe* Albanian industries and plants receiving aid from the

" See Table.bove, forescription of technical aid being exchanged between tlie two countries. ** ollows onbove. ollows on Continued on p.

C I

Bulgarian Industries and Plants Rsceivlng Aid from the USSR

Remarks

ob"yekts for heavyaid frommetallurgical plant atefractory plant, and aplant have been identified.

at Dimitrovgrad. USSR providing majority of equipment. Construction startedegan producing Facilitiespen-hearth furnaceston capacity, an electric furnace,olling mill. One source haa3 output0 metric tons of steel, and another source4 outputetric tons. 7 planned productionetric tons, ofetric tons of pig iron,etric tons of rolled prjoducts. J

Machine Building Works

1 olectrijC furnace with estimated annual capacity ofons.

ob"yekts in the power industry have beento be receiving Tekhnoeksport assistance. The Chervenkov, Batak. and Stalin power stations have been identified

called. Thermal electric station. egawatt capacity.

-

Table 7

Bulgarian Industries and Plants Receiving Aid from the USSR

(Continued]

Remarks

(Continued)

atatlon. Started Innetations in the Batak area.egawatt capacity.

electric station. Original capacityegawatts raiaed toegawatts Ultimate capacity to beegawatts. Conatruction of the aecond turbogenerator Kokalyanc hydroelectric(the second plant of the Stalin system) begun

Thermal electric nation. Put into operation in4 under Soviet apeciallats.

Tekhnoeksport ob"yokta noted. itrogen-fertilizer plant at Dlmitrovgradenicillin plant at Rafegrad firmly identified

nitrogen-fertiliser plant at Dlmitrovgrad. provided by USSR on credit. Contractsof this plant signed by the USSRin First ahipments offrom the Inaugural ceremonies markedthe plant in Plant reportedcapable ofons ofper year, aa well as nitric acid.

-

TabLe 7

Bulgarian Industries and Plants Receiving Aid from the USSR

(Continued)

Communications

Textile Light

Transportation

' '

1 "

Two Tekhnoekspor't ob"yekts have been. adio station at Balchik has been tentatively identified

One ob"yektloth plant has been seen

Seven ob"yekta are being used by Tekhnoeksport. The sulfate pulp mill at Krichimugar mill have been firmly identified. Atlantb' yekls] for communications equipment has been tentatively identified

Cellulose factory. Equipment provided by the USSR and conatructed under the guidance of Soviet officiala. Scheduled to begin production fh Assemblyarge turbine at fhc power station of this'-plant was reported to have beenetarted In the summer

Two Tekhnoeksport ob"yekts have been tentatively identified with this industry (see.

One auto repair plant. Provided USSR or. credit extended

C9

secure

Table 0

Albanian Industries and Plants Receiving Aid from the USSR

(Continued)

Aid is being provided to six Tekhnoeksport ob"yekts (see.

Stalincombine near Tirana. All equipment pro-

vided by the USSR on credit, under supervision of Soviet engineers. Apparently includes both cotton and woolen mills. Annualquare meters of cotton cloth, Equippedooms.

i six ob'yekts being supplied by Tekhnoeksport. ugar factoryish canning plant have been identified (see

mill. All equipment provided by the USSR

on credit, Annual0 tons.

Elbasar. and one ofplants. Equipment provided by the

locationon credit.

Vlorelargest cement works in the Balkans, equipped

with the latest Soviet'machinery. Scheduled to be put into operation shortly.

Tiranaengineering works equipped with the latest Soviet

machinery. It produces spare parts for autos, harvester combines, and tractor*. It has also recently begun production of plowB, cultivators, harrows, and various hardware items.

JOB rnvrr

C. Hungary.

The USSR haa given considerable assistance to tha basic development oi the Hungarian economy. The long-term Soviet-Hungarian trade agreementpecified that the USSR was to deliver equipment and complete enterprises to Hungary. No details are known as to the value and extent of this agreement, but presumably the equipment was provided on long-term credit! There are recent reportsillion Soviet loan to Hungary in the form of precious metals and consumer goods. oan in the form of precious metals could indicate an intent to finance purchases from Western nations (see.

. -

The outstanding projects which the USSR has helped to establish in Hungary are the aluminum plant at Inoia.and the steel combine at Stalinvaros. The addition of the Inota plant has virtually doubled the Hungarian output of aluminum, and the-operation of some new facilities at Stalinvaros is reported to have increased the country's output of pig iron byercent. /

* The USSR also has assisted in equipping new Hungarian textile mills and has been active in providing technical documents, advisers, and technical training for Hungarian workers {sec

A recent agreement of4 made provision for the transfer to Hungary of Soviet shares in the five joint stock companies organized. These joint companies dominated Hungarian river and air transport and the oil and aluminum Hungary is to pay for the Soviet shareseriod of years on "preferential terms. " One source has reported that the sale price of the Soviet shares in thc joint companies for shipping, Oil, and air transport amounted to the equivalent

* indicates and describes some Hungarianand plants known to have bee" constructed with aid from the USSR

* bove.. ollows on

Hungarian Industrie* and Plant* Receiving Aid from the USSR

Remark*

Power

Chemical

/

Mo/

Inota IPS/

///

/

metallurgical combine known a* the Dunapentste Metallurgical Combine beforeocated atm south of Dunapcntele on the eaat bank of the Danube. The planning, supervision of Installation, and the heavy equip-ment for the plant provided by the USSR. Plant facilities includedubic-meterollingokeire-brickepair shop, and an electric power station. The first furnace began operation in4

Aluminum plant. Beguninishednnual capacity. on* of aluminum.

A power Installationna pen tele for thecombine.

Thermal erectrl station. Suppliee both Inot* and Stalinvaro* metallurgical plants. egawatt*.

A chemical plant to utilize the byproducts of th* coke plant at the metallurgical combine.

Equipped with Soviet machinery. Put

Equipped with modern Soviet machinery. Upon completion will Increase Hungarian production of cotton good* byercent.

Cottor.-proceselng plant, the sixth to be built in Hungary. To be equipped with Soviet machinery. Daily 'capacity, ilograms of raw cotton

H. AuiCrU.

Soviet economic relations with Austria have beenrather than constructive. The USSR has made nodevelop the Auatrian economy as it has tho economies ofEast European countries under its control,the terms of the Austrian peace treaty are stillby Allied and Soviet

Since the end of thcmall but significant share of tho Austrian economy in the Soviet Zone of Occupation has been under the control of thc USSR. Thc Soviet-controlled properties are the, resultree, unilateral interpretation by the USSR of tho provisions of the Potsdam Agreement concerning theof German assets in foreign countries./ The USSR has made contributions to the economic sectors under its control, but, becauae it is the sole beneficiary, these investments can hardly be classed as economic aid to Austria unless these properties eventually revert to Austrian control. There has been no indication in recent monthshange in the status of the Soviet holdings in Austria*.

The Administration of Soviet Property in Austria (Upravleniye Sovctekogo Imushchestva AustriiSIA) owns morendustrial and commercial enterprises in Austria as wellhain ofetail stores developed The net annual profit accruing to the USSR from the operation of the USIAis estimated to run in the neighborhoodillion. /

it

Another Soviet organization, the Soviet Mineralontrols thc oil properties within the Soviet Zone. Assuming that about half the shipments of SMV oil and oil products going to Soviet Bloc countries are fully paid for. the net profit from the operation of these properties ia nowillion per year. /

-

I. Communist China.

Soviet economic and technical assistance has been ofimportance to thc reconstruction and development ofCommunist economy arge volume ofand raw materials has been supplied to China. TheSoviet technicians, techniques, processes, patents, anddata haaital factor in thc Chinese Communistdevelopment under the First Five Year Plan. although comparatively small,

have contributed to Chinese economic growth. On the other hand, Soviet economic and technical aid to Communist China, aa to the European Satellites, affords the USSR an opportunity to exert influence upon the Chinese economy and institutions. The presence of Soviet advisers and widespread adoption of Soviet techniques and methods of economic planning, management and control procedures, and industrial processes are creating in China an economic system whichlose copy of the Soviet system. /

I. Sino-Soviet Joint Companies.

Soviet contributions to the formation of joint companies with Communist China have been madeorm of economic and to clinical assistance. At thc same time, these companies have given thc USSR an economic control device which has been relativelyin certain areas. The four joint companies which arcoperating as such in Communiat China were established hy agreement0 Thc Slno-Soviet Joint Stock Petroleum Company was established for the development of the oil resources ot Sinkiang Province. The Sino-Soviet Joint Stock Nonferrous and Rare Metals Company established for the exploration, prospecting, and extraction of nonferrous and rare metals in Sinkiang Province and the Sino-Soviet Joint Stock Company for Aviationhich is in charge of air transportation between Communist China and

-

tot) USSR, were set up by the Sino-Soviet Agreement of/ The shipbuilding facilities at Daircn, under thc control of tho USSR from the end of World War II, were placed under the Sino-Soviet Shipbuilding Company

On4 thc Chinese Communists and the Russiansoint statement from Pekingajor Sino-Soviet agreement which provided, among other things, for the transfer of the Soviet share in the operations of the four joint Sino-Sovietto China, Payment for the Soviet share will be made "over the course of several years by supplies of goods which are the usual export commoditieshina. "

Thia transfer ia attributed to the fact that China has advanced economically and technically to the point where ita own economic organisations "can themselves direct the operations of theincluded in these joint companies. " An admission of the continuing technical inadequacies of Communist China is. however, implicit in the Agreement on Scientific and Technical Cooperation announced at the same time. Although phrased carefully to indicate an equal exchange of technical data and personnel, there is little doubt that most of the flow is from the USSR to China. / There is no doubt that thc USSR will continue to furnish technical and probably administrative advice for thc operation of these companiesonsiderable period.

2. Soviet Personnel.

In spite of numerous references to Soviet technical personnel in the Chinese press, no reliable totals are available on thc number of Soviet specialists assigned to Communist China. There are indicationn that thc total may have fluctuated considerably, since the average term of Soviet personnel in China is estimated to beears./ It had previously been estimatedoviet military and technical personnel arrived in Chinaater report, baaedapanese source, estimated that there0 Soviet military and technicalin China0 civilian/ till later estimate, forut the number00 technical and military advisers./ It appears that0dvisers and technicians on military training, military construction, and,railroad maintenance and Operations predominated. 2ore emphasis waa placed on economic planning and on other technical projects.ummary of available information3 on the technical and advisory capacity ofoviet technical and nonmilitary personnel.

Tableollows ori

- 62

Distribution of Soviet Advisers and Technicians Sent to Communist China3

Sample W

trade and procurement representatives

printing, and publishing specialists

5

forestry, and fishery specialists

3

and social services specialists

services

0

building -

8

industries

7

transportation

metallurgy

0

and pulp industries

5

power industry

2

metallurgy

and equipment industries

8

communications

transport

7

finance, economics, and geology advisers

transportation

3

union advisers

0

industry

8

industries

8

meteorology, and cartography

5

materials industry

2

2

This is based onnown cases, which is

epresentative sample of an unknown total.

of rounding, percentages do not.

The Sino-Soviet Agreement announced4 proved that the two sides should "send specialists to given, .stanceacquaint each other with their achievementsthe acids of sconce and technology" {see. ta the past this ha. consisted of Soviet adviser, and technicians being sent to Com-

8tUden"T

USSR for technical training. The question of payment, for these

serv ces was not clarified by the announcement, although it wa, stated that the exchange of technical data should be free of charpe There

doubt that the Chinese are paying for the technical aid ex tended by the USSR, even though the actual pattern of pavme-sClear yet.

3- roject Soviet Aid Program.

Several agreements have been signed bv the1 Communis, China in which the USSR, has extended economic and techn.cal aas.slance for the industrial development of the Chinese

con^

cona.stmg of Sov.et aid to China for the reconstruction, expana on and constructionndustrial enterprises. This programtarted0 and is scheduled for comp.etion by the9

P.bove.

Under the agreement of0 the USSR agreed to supply Communist China with equipment and other materials for thc reconstruction of restored and newly builtenterprises. / On3 the USSR agreed to assist in the expansion and construction of electric power stations./ In thc summer3 an agreement was signed providing forand technical assistance to China In the construction and renovation ofdditional enterprises and economic and technical aid in thenterprises then being built or renovated. / On

rotocols were signed on the granting of assistance by the USSR for building an additionalndustrialand on increasing by an amount valued at morerubles the supply of equipment forenterprises covered

in thc previously signed agreement./

Soviet assistance to these projects is "from beginning to end"rom the selection of factoryhe collection of data for planning purposes, and the actual planning, to the supply of equipment, the direction of construction, the installation of machinery, and the. turning out of new products. / Soviet contributions torojects have been stated to be roughlyoercent of the equipment, semimanufactures and materials. The Chinese are to supplyoercent of the goods needed. /

rojects have been scheduled for the period of the First Five Year Plan. rojects in which the USSR is assisting constilute thc largest group./ Chou En-lai in his speech before the National Peoplc's..Congrcss,tated thatrojects have been wholly or partly finished and have begun production, including the heavy rolling mill, seamless steel tubing mill, and steel sheet mill of the An-ahan Iron and Steel Company, as well as the Hai-chou Opencut Coal Mine at Fou-hsin./

-

re in their early or planning stage and, therefore, arc not considered bv the Chinese as being started.

.primary emphasis of the Chinese Com-

munist First Five Year Plan and the Soviet aid programthat is, emphasis upon the reconstruction, expansion, and construction of plants of the heavy and electric power industries. In heavy industrial development, probablyjor accomplishment thus far has been

-

the work in restoring and expanding (he An-shan Metallurgical Combine in the northeast. Soviet participation hasital factor here. ists thc major projects at the An-shan Metallurgical Combine which have received Soviet aid. Electric power projocts receiving Soviet equipment and technical assistance are also listed in Many of the projects at the An-shan Combine are noted to be replacements of old facilities. Soviet equipment lo these projects In some cases would beeplacement for equipment taken out by the USSR after World War II.

Soviet assistance to these projects hasital factor in the industrial development of Communist Chinaithout Soviet equipment and technical aid. the progress which has been made under the First Five Year Plan would have been The dependence of China on Soviet equipment and technical aid, on the other hand, provides the USSR'with the opportunity to influence the nature and rate of Chinese industrial development. The presence of Soviet technicians and the widespread adoption of Soviet techniques and methods of economic planning, management and control procedures, and industrial processes, even without any other exertion of Soviet influence on Chinese Communistpolicy, arc strong factors contributing to thc development in China of an economic system whichlose copy of the Soviet system and is closely oriented toward the USSR.

4. Soviet Long-Term Credits to Communist China.

Two long-term credits are known to have been extended by the USSR to Communist China for ita industrial development (sec The agreement of0redit0 million to be utilized in equal amountseriodears On IIreditillionillion) was extended. Informationthe terms of this credit was not released by the Chinese Communists. The context indicated that the credit was to be used in conjunction withrojcct aid program. The following are possible alternative reasons for the new Soviet

* ollows onbove.Continued on

-

Chinese Communist Projects of the Ferrous Metals and Electric Power Industries Receiving Soviet Equipment and Technical Aid a/

Remarks

Metals Induatry at thc An-shan Metallurgical Combine

blast furnaceutomatic blast furnace No. 7

Modern seamless tube mill

ail mill Automatic blast furnace No.heet mill

Coke furnaces Nos.ndpen-hearth shep No. 2

New blooming mill

Refractories plant Ore concentrating plant Sintering plant

An-shan

An-shan

An-shan An-shan An-shan

An-shan An-shan

An-shan

An-shan An -shan An-shan

inlaced in operation3

laced in operation

(replacement of oldlaced in operationlaced inlaced in operation4

(replacement of oldlaced in operationstimated to be completed some time

Should be completed in time to take care

of ingots from new open-hearth shop. Completion date unknown. Completion date unknown. Completion date unknown.

Power Industry Transmission line project Power plant expansion

Northeast Fou-hsin

Connecting An-shan, Mukden, Fu-shun. Fou-hsin, and Fen-ch'i.

Two separate stages of power plantprobably indicating two separate projects.

Documentation available on request.

Table 13

Chines* Communist Projects of the Terror* Metals and Electric Power Industrie* Receiving Soviet Equipment and Technical Aid a/ (Continued)

Remark*

Power Indu*try (Continued)

Power plant expansion Power plan: expansion

Hydroelectric power station Power plant

Thermal electric power

^ Power plant No. 2

>

New thermal power plant

Power plant

Two or three small power plants

Hydroelectric power p'.ant

Dairen Fu-shun

Ta-feng-roar. Dam

(Kirin) Fu-ia-erh-chi (nea:

Ch'i-ch'i-ha-erh) T'ai-yuan Pao-t'ou Sian

Ch*ng heien

Urumchi

Chungking YUnnan

Shlh-lung-pa (near K'un-ming)

Two aeparate stage* of power plan:probably Indicating two separate project*.

May have been brokeneparate project*.

Planned major power plant (under

Plant barely started now.

In partial operation.

Scheduled to begin "partial" operation

f.J. Scheduled to begin operation inutput toercent of

present generation In province. Scheduled to begin operationart of development of tin mines. Barely started now.

Documentation available on request.

a* Thc "edit mayontinuation of credits alone

the line of the Sino-Soviet Aid Agreement

t redU mayress Purpose ofortion of the Soviet deliveries of capital goodsnabling Commumst China to reduce planned food exports without cutting back on scheduled investment. This could be necessary, in view of serious Hooding of surplus food-producing areas.

V n' mParl' maV for refunding the former

credit wh.ch the Chinese Communists, beginningust pay off at the rateillion annually forears./

It is possible lhat when4 credit iscredits will be sought by the Chinese Communists. of4 credit indicates that future credits may bewhen Chinese exports do no, yield sufficient foreignpay for the imports"

-

Some relatively minor gifts of equipment and technical aid have been given by the USSR to Communist China. For example, the Soviet delegation which concluded the Sino-Soviet economicof4 announced onift of equipment (includingombines,rucks, farm tools, power station, and communications equipment) and services of Sovibt exports for thc first year, to enable the Chinese totate grain farm3 acres which would be ain reclaiming waste and virgin lands./

These minor gifts and the Soviet credits, however, do not pay for much of the material aosistanccthat ie, equipment which the USSR is supplying forrojects.- This Soviet equipment is paid for by Chinese exports. This, view is supported by the following statement from an editorial in Jcn-min Jih-pao of "Although it is permissible for us to mainly depend upon imports of equipment in thc industrialisation of thc country, yet it is neither good, nor possible to mainly depend upon loans to carry out the /

J . North Korea.

There were some indications of Soviet aid to North Korea as early This included Soviet technological assistance ln the restoration of iron and slccl works destroyed in World War II. including restoration of the Kangso Steel plant andju Machine-Manufacturing Plant. Assistance was also extended in the manufacture of copper pipes, wire, and silicon steel plates at thc Songjin Steel Plant. etallurgical institute wasat P'yongyangoviet specialist./

Onyear Economic and Cultural Pact was signed by the two countries. Jn addition to providing (or trade and cultural interchange, supplemental agreements signed at thc same time provided Sov.et Aid for North Korea. This aidof aZ -percent loan for the purchase ofequipment and raw materials, to be repaid inears lt also provided technical assistance for

- 72

Norlh Korean induHtry and agriculture (nee. Although thi3 aid was not particularly generous, it was, as far as the American Embassy in Seoul knew, the only credit extended

In3 the largest manifestation of Soviet aid occurred. The USSRillionillion) as outright aid without compensation,ercent to be used for the buildup of military armament,ercent for light industry, andercent for heavy industry. / In latesung announced that the USSR had decided to remit the entire "war debt" of North Korea and had granted easier terms on the repayment of the prewar credit. It was later revealed that half of9 debt was written off and the remaining payments were to be madeumber of years. This generosity was largely offset by the announcement thatillionillion) would not be expended on North Koreaear but would have to last until thc end There were no'^romises that additional grants would be forthcoming in the future./

* orth Korean press announcement4 indicated that the USSR had already sent equipment and materials for rehabilitation, construction, and daily necessities, amounting in value toillion5 million). Completehad been sent for factories and plants including cementulfuric acid factory, textileeat comhine, and power stations. The factories and plants were noted tn have been equipped with new advanced techniques with the aid of the USSR, the People's Republic of China, and the other people's democracies. Technicians also have been sent to North Korea by these countries. /

The aid program to North Korea is interesting as anwithin the Sino-Soviet Bloceemingly genuine andaid program. Apparently the USSR and Communist China are intent on reconstructing thc North Korean economy more rapidly and efficiently (as an integral part of the Sino-Soviet Bloc) than the South Korean economy is to be reconstructed by US and UN/

P.bove.

BLANK PAGE

APPENDIX A

COMPARISON OF SOVIET CREDITS TO BLOC COUNTRIES WITH US GRANTS TO WESTERN EUROPE UNDER THE FUR OPEAN RECOVERY PROCRAM

On thc assumption that the long-term credits extended byto the Soviet Bloc countries were utilized in equalthe length of the agreements, it appears that the annualcredits utilized5 .variedow2ighillion ruolesillion, respectively, at official exchange rates). ranged from one-twentieth to one-tenthercent,of thc estimated Soviet gross national product (GNP) in

By comparison, the grants to Western European countries by the US under the European Recovery Program rangedillion94 billionrercent andof the US GNP for those years. /

The ratios of loans or grants lo GNP may be usedough measure of the relative burdens imposed on the US and Soviet ccono-mice by these assistance programs. Comparison of the ratios for the two countries indicates that the largest US grantsurden nearlyimes greater than lhat of 'he estimated peak Soviet credits Even ihc smallest US) is four times greater than the highest Soviet

In dollar terms* the peak US grants9 were overimes larger than0 million which it is estimated thc USSR will lend to its Soviet Bloc partners inwhereas the smallest US grants under ERP wereimes larger than the estimated5 peak.

Current US dollars at official exchange rates.

-

It uhould bo noted that tho compariuon of the dollar equivalents calculated at thc official exchange rate ia favorable to the USSRthe ruble is considerably overvalued. Furthermore, the Soviet credits are to bc repaid at some future date and therefore are in the long run considerably lessacrifice than the-outright grants. Consideration should be given, however, to the fact thai the impact of an investment of given sire is greatermall economy thanarge one. For this reason the relative short-run effects, of US and Soviet aid upon tho respective recipient economies may not be quite as disproportionate as the comparison of the relative burdens and dollar valuos would indicate.

-

APPENDIX B

GAPS IN INTELLIGENCE

From the point of view of this report there arc the following three major gaps in intelligence on Soviet economic assistance to the Sino-Soviet Bloc countries;

1. Information on credit agreements between the USSR and Soviet Bloc countries is incomplete. In the cases of Albania and Hungary, for example, long-tc'rm agreements are in effect for delivery of capital equipment on credit from the USSR, but nothing is known of the magnitude of these agreements. In other cases reports on the value of loans are available, but information about provisions is either lacking or indefinite.

n many cases it is not known how much and whatquipmentarticular installation is actually being supplicc by the USSR. Without this information it is difficult to make an accurate assessment of Soviet aid.

Original document.

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