COMMUNIST ECONOMIC ASSISTANCE TO CHILE (S-4211)

Created: 3/9/1972

OCR scan of the original document, errors are possible

CIA HISTORICAL Rc-ZiiLW PROGRAM

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MEMORANDUM FOR: Scott Van Bfifcenburg,

Office of Bilateral Assistance, Department of Treasury

Communist Economic Assistance to Chile

In response to your request, attached is OER'slong-term credits extended to Chile by Corcnunistare also including some consents on the slow drawdowncredits thus far and on likely assistance flows

0ifi.ee of Economic Kcsearcfi

Attachment: As Stated

Communist Economic Assistance to Chile

Known long-term Communist economic assistance to Chile now4 million, of which more0 million has been extended since1 (see the table). Except5 million earthquake relief grant from Chinaeported Soviet offer to5 million prefabricated housing plant, all of this assistance has been in the form of long-term credits to cover purchases of material and technical expertise from the donor country. To date, virtually nothing has been drawn on these credits. Utilization of evenillion credit extended7 is still largely in the feasibility-study stage, with Soviet technical teams drawing up plans forew port, renovating some existing ports, andish processing complexubricants plant. The Soviets are now giving some technical assistance to the fishing industry under this credit, however, and the first shipmentsrefabricated housiro project arrived in January. Alto, some jeep purchaser have been financed under Soviet and Romanian credits, and lost month Allende announced that Chile wouldoviet tractors

The slow utilization of these project loans and supplier credits reflects in part continued resistance by Chilean

industry and military alikehift to Communist area equipment and technology- The recently published IMF study, however, repeatedly refers to Chilean government plans to draw down heavily on Communist credits This may reflectlans to makehift to Communist technology or his hopeshange in what he now viewsess than generous Soviet policy regarding "untied" aidor both. Thus far the Soviets have restricted their offers of the kinds of aid Allende wants and needs mostillion in hard currency credit through their European banks. Moreover, except forillion Chinese credit extended in January, we know of no Communist offers to help Chile meet its current consumption requirements for food, other consumer goods, petroleum, and the like.

Clearly, there are strong political.reasons for deeper economic involvement in Chile by the Communist countries, particularly the USSR. With Cuba as an example to be avoided, however, we believe the Soviets want to tie any major aid commitment to assurances from Allende that he can put the Chilean economy in order. oviet decision to bail Chile out with more hard currency credits or with consumer good and petroleum supplies, coupled with an effective Chilean decision to turn eastward to fill its machinery and equipment

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Chile: Known Long-Teem Credits from Communist Countries

In Million US Dollars

plants (port lubricants plant; housing project, chemical plants;assistance; technical aid to copper facilities)

a/ Machinery andillion earmarked for road-building equipment)

S 5

S20

$20

Hungary Hungary

Bulgaria

Romania

Poland

Poland

China

China

China

Total

Czechoslovakia 8

11

1

1

November1

112

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Industrial plants (plants for the manufacture of compressors, motorcycle engines, and power tools)

Machinery and equipment

Pharmaceuticals plant; copper mining and transport equipment

Mining equipment; health supplies; possibly cargo crane plant

Sulphuric acid plant; agricultural machinery and transport equipment; possibly copper manufactures plant

Technical projects, particularly in the mining, fishing, and metallurgical sectors

Machinery and equipment

Earthquake relief (grant)

Small and medium-sized projects over thn next four years

finance imports of food and pharmaceutical product :i

Expansionillion credit-extended

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