RUMANIA'S POSITION IN THE SOVIET BLOC

Created: 4/22/1964

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RUMANIA'S POSITION IN THE SOVIET BLOC4

ftPPROVEBHRIUIASI DATE: AM

DIRECTORATE OF INTELLIGENCE

i!;iS MATF.mAL CONTAINS INFORMATIONUi THF NATIONAL DEFENSE OFIT=TDLTHIN THE MFANJNO OPPTONAOK LAWSyr.NDHF.OK REVELATION OF WHICH TN ANY MANNKH TO AN UNAUTHORIZED PERSON IS PROHInrTPD BY LAW.

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CENTRAL INTELLIGENCE AGENCY MEMORANDUM:

SUMMARY

Rumania, once the most sycophantic of the EasternCommunist stales, Is today speaking out independently in Soviet bloc councils to defend and to advance its national Interests. Although it isard-line Communist regime in domestic political and economic matters, itseconomic, political and cultural ties with the non-Communist world will probably in time influence it in the direction of domestic liberalization. ound economyightly knit and determined leadership, the Rumanian regime gives every indication of continuing on Its independent course in bloc aifairs as well as in Its relations with the West.

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RUUAXIA'S POSITION IN THE SOVIET BLOC

Rumania's policy of becoming increasingly Independent of tbe USSRogical outgrowth of the backgrounds and postwar experiences of theleaders. The key figures in the Rumanian Workers' (Communist) Party are predominantly na-tiviets. Party Flrat Secretary Gheorghe Gneorgblu-Dej may well have escaped tbe Stalin purges ofs because bo was held in Rumanian royalist jails during that period. In contrast to mostin Eastern Europe, which purged their "Tltoiat" elements In the and, the Rumanian party purged the Moscow-trained element. Ana Pauker's expulsion from the Politburo in2ood example.

In the decade after World War II, Doj builtersonality cult of his own cot unlike that of Stalin. Ho has given only lip service to Khrushchev's de-Stallnization program, and inthe harsher methods of authoritarian rule aro still in vogue. By the, Bucharest hadolicy of reserve, characterized byand unenthusiaatlc support, on almost all key Soviet policies.

The first Indication that Rumania intended toore independent economic position appoared in Reporting on the Six-Year, Gheorghlu-Dej stated that trade with "socialist" countries (which had accounted for SO percent of total Rumanian tradeould sake up onlyoercent of the total Apparentlynegotiations with bloc partners in connection with the economic plans for5 did not satisfy Rumanian requirements for Investment goods, forcing the regime either to modify its own plan or turn to the free world for the desired imports.

At the sane time,the Rumanian regimo was dissatisfied with its economic position in the bloc on two other counts. Development of foreign trade with tbe bloc had boen sluggish for several years, and the regime perhaps became convinced that it must greatly expand its trade with the free world If it was to achieve high economic growth rates during

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Secondly. Soviet extensions of credit to Rumania In totaled 5 million, much lees than those received by most other East European countries* Thle probably seemed unfair, particularly in the light of Stalin's earlierfrom the Rumanian economy throughand deliveries from the jointcompanies. No Soviet credit is known to have been extended to Rumanialthough one may have been promised for the proposed Galatl steel combine. Credits from the more developed Beat European countries also had been small. On the other hand, several West European countries began to expand their markets In Rumania9 by extending small investmentfirst provided by the free worldecade.

Bucharest's moves toward greaterhave been encouraged by the regime'swith its economic accomplishments and by its confidence in future progress. Although Rumania has received comparatively little foreign assistance, it has made great strides inin recent years. In contrast to the slowdown in industrial growth In most of Eastern Europe. Rumania has maintained an average annual industrial growth rate ofercent, giving it one of the highest recent rates of overall economic growth In Europe.

This high rate of economic growth stems partly from Rumania's relatively low degree of In contrast to highlycountries such as East Germany andRumania still has large reserves oflabor and many opportunities for simple advances in technology. oreover, growth has been stimulated by an improvedsituation andapid expansion of foreign trade, especially with the West. Agriculturalleveled off near the postwar peak,the sharp fluctuations of previous years. The depressing effect of collectivization on production apparently was offset by technical advances, and collectivization facilitated exports of foods by tightening state control over agriculture. Rumania is capable ofapid, although probably somewhat reduced, rate of economic growth in the next several years.

Political Developments

the Rumanian regime In itswith the Soviet bloc seems to be movingposition not unlike that of Yugoslavia, itconservative, especially in regarddomestic policies. There is no evidence ofdeviation toward the more decentralizedeconomic system, about aspects of whichand even the Bulgarians have permitteddiscussion. On the contrary, thesystem continues to be characterized bycentral planning and nearly completeof agriculture. On the domesticthe regime has made clear It does notany liberalization comparable to thehave come about in its relations with thebloc and with the West. Nevertheless,guiseatin island in the sea ofhas takennumber of steps thatto the population and will whet itssome relaxation in domestic policy.

campaign for de-Russlfication oflife began inhen Bucharestcriticized the USSR for underplaying inpublication the role of the Rumanianliberating the country from the Germans. oscow was seldom mentioned in Rumanian

propaganda as aiding Rumania's progress. Last spring the party spread the news throughout the country of the Dej regime's defiance of Khrushchev's economic policies, thereby appealing to popular nationalist sentiments which hold Russia toraditional enemy. During the May Day celebrations no posters of living Soviet leaders were In evidence.

de-Russlfication measures haveseveral that directly affect the public. or example, Russian languageschool1 were mado elective rather At the same time the "Maxim Gorki"of Language and Literature in Bucharest Inublicationsthe Roman origins of the Rumanianaddition, Radio Bucharest has markedlyrebroadcasting of Soviet radio programs.

Rumania has moved toward greaterIts political and culturalthe West have simultaneously increased, thusanother influence toward domestic Inhe regime agreed to theby the OS Legationonthlywhich began In May. Two months laterstopped jamming Western broadcasts. are removing long-standing irritantsexit visas to dual nationals, and arewestern states to raise the rank ofmissions in Bucharest.

Kxpanded Relatione With the Free World

with the non-Communist world, European countries, roseercent Inaccounted for nearly one third of total tradecompared with one fifth Thus, theof trade toward the West that5 was realized four years early. share of trade with the Westrom incompleteas total Rumanian trade continued to Rumanian petroleum, forest, and foodhave proved to be readily salable In This ability to boost exports to the West

has been enhanced by resourcefulness In finding now markets and, in some instances, by arrangingbarter deals through private traders.

from giving Rumania greaterin economic planning, closer economicwith the West have brought the benefits oftechnology and medium-term credits forRumanian projects. Preference for Westernhas even led Rumania to place orders Infor equipment that the more developedwanted to supply. urvey by the USSeptember indicated that Western-suppliedst0 million had been contracted for

or built in Rumaniand that the regime was contemplating additional purchases of more0 million. Rumania has received favorable credit terms for some purchases from Western Europe, with repayment periods of as much as six years. Although Rumaniaumulative trade deficitillion with the free worldtriking

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growth of exports3 apparently restored the balance. This should improve Bucharest's chances of obtaining additional West European credits if they are needed. Rumania seems to have apotential for continuing to Increase exports to the West. It will be difficult, however, to sustain the rapid pacenlessproduction can be raised above the recent plateau.

has been pushing for morerelations with the US. In conversationsUS officials, Rumanian leaders haveubstantial rise In US-Rumanianeneral improvement in relations. has indicated, however, that It is nothandouts and that It can readily obtainelsewhere if the US does not loosen its

Economic Disputes with the Soviet Bloc

determination to assert itsInterests was not revealed fully untilthe leadership successfully opposed effortsthe powers of the Moscow-sponsoredEconomic Mutual Assistance (CEMA) andopposition to the buildingargeat Galati. The USSR and some East Europeantrying tonew stage" in bloccooperation, had proposed closernational plans, sore Joint investmentmore extensive product specialization in Moreover, Khrushchev hadoint planning staff for CEMA. Theapparently fearedEMA withwould make decisions which wouldIndustrialisation. Bucharestany change in the organization thatRumanian economic sovereignty. Otherprobably were also opposed toEMA planning staff, but Rumaniapublicly hostile. Rumania, in addition,to accept some new forms of cooperationsupported by other satellites.

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the USSR agreed0 tocertain facilities for the Galati steelto Increase deliveries of Iron ore, itmisgivings about the project because ofdomestic supplies of iron ore and These doubts became strongereduction of projected steelIn the bloc. Nevertheless,EMAJuly, Rumania reportedly reaffirmed its plan

to proceed with the Galati project. It had alreadylate millritish-Frenchand had opened negotiations for the purchase of other steel-saklng facilities in the West. The USSR not only failed to alter Rumanian plans for Galati, but It now has apparently cowaaitted Itself to provide the blooming-slabbing mill and sheetmill previously promised,

Rumania and the Slno-Soviet Dispute

has taken advantage of thedispute to enhance Its prestige and tonational Interests. Moscow's need for support

in the dispute has been usedargaining point by Bucharest In concert with the alternatives arising from its improved relations with the West. Sincehen Rumania sent its ambassador back to Albania after having withdrawn him in1 as had other Soviet bloc states, Rumania has been more reticent than any other Eastern Europeansupport for Moscow In thedispute. Bucharest essentially agrees withsubstantive positions but is apparently even more concerned than Poland or Hungary over theeffects on its bargaining position with the USSR should Khrushchev carry the dispute with Chinainal break.

example, Rumania has printedagreeing with Moscow's peacefulbut has done little to criticize Pelplngadhering to this line. It has also failedMoscow's plans for dealing with thehas absented himself from meetingswith the dispute, such as occurredthe East German party congress in Januarycelebration of German party chief Ulbrlcht's

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blrthday Inndhgathering. Host dramatically, the Rumanian party made an independent effort this March tothe dispute from becoming more acute bya delegation of its leaders to Peiplng.

Prospects

18. The DeJ regime is apparently convinced that the USSR cannot apply strong politicalor economic sanctions and that It sill not intervene militarily, moreover, in Its show ofRumania probably will continue toat least tacit backing from some other East European leaders who fear that closer economicby the USSRoviet-dominated CEMAmight work to their disadvantage as well. It seems likely, therefore, that Rumania willassert its Independence in pursuing its national interests in its relations with both the bloc and the free world.

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