WESTERN LENDING TO THE USSR

Created: 1/3/1980

OCR scan of the original document, errors are possible

CONFI&rJ ITIAL

NATIONAL FOREIGN ASSESSMENT CENTER

WASHINGTON.

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Mr.arnosEA Department of Defense

Lending to the USSR

1. Attached are current estimates of officially-

the USSR. Drown commitments refer to credits already used by the Soviets to finance imports from the West. Undrawn commitments are those allocated to signed contracts which Western suppliers have not yet (Tablojl). Offers are the portion of credit lines extended to tho USSR which havo not yet teen committed to particular sales contracts. The total" in the tables reflect the amount of principal only. They ate estimated from credit data reported by NATO and the Berne Union of Credit Insurers which incorporate Loth principal and the future 3troara of intorcst payments. Wo, do not have adequate information to break out commitments from individual countries into drawn and undrawn commitments (Table

2*. Although 'the USSR has made considerable use of officially-backed credits, tha bulk of its borrowing has come from private sources, primarily Western commercialo estimate the USSR's debt not backed by Western official guaranteesillion at Bonks in the UK, France, and West Gormany are tho primary commercial lenders to tht USSR. US bonksncluding their foreign branchesaccount for aboutorcont of bank lending to tho Soviets, (UJ

ERIVED FROM.

Appropriate coordination has been mado within OER.

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A cutoff jin Western lending would not seem to pose severe problems to the Soviets in the short-run. The pace of Soviet..orders for Western equipment has fallen for j! three years running reflecting, in large measure, Soviet problems in installing already delivered equipment. A'moratorium on long-term government-backed credits, if in effect forelatively short period of time, may have the effect of allowing Moscow to digest that equipment which it has already received. Western restrictions on commercial credits would also have limited impact since the USSR (a) has overillion in deposit in the West and (b) can meet any additional cash needs by stepping up gold sales. reeze on Soviet assets in the West could present Moscow with problems in paying for its grain imports.

A curtailment of official lending would, in any event, prove difficult for Westernevocation of credit commicments on signed contracts wouldtrong opposition from the business community. Exporters are under legal obligation to honor the terms of signed contracts and have invested resources in meeting deliveries to the Soviet Union.utoff of Western official lending was complete the Soviets could probably breakredit boycott by allocating ilargo ordery to countries willing to provide credit. The USSR can purchase most needed equipmentumber of suppliers and has been very adept in the past at playing off competing exporters ond their governments to obtain favorable credit terms.

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.:. Table Official Credits from the T: 11 8 in billion USS

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NATO Countries Japan j' ;

Other :

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Total

Committed Credits

Drawn

4.6

Undrawn

4.8

1.

0.4

6.9

6.8

Credits offered but as yet Uncommitted

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'M Table 2

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USSRt Credit Commitments and Offers fromn billion US $)

Commitments

r'' ^France

Iprg

ih

IOapan

taly

:anada

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Total

4.0

hi 1

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iii"

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Original document.

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