Created: 5/15/1964

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SC No.


special report



central intelligence agency




This document MUSI NOT BE RELEASED TO FOREIGN GOVERNMENTS. If marked with specific dissemination controls in accordance with the provisions of, the document must be handled within the framework of the limitation so imposed.



Rumania, one* one of tbe most sycophantic of the European Communist states, is today speaking out independently in Soviet bloc and othercouncils to defend and advance itsinterests. Although its leadershipto follow an essentially hard line Inpolitical and economic matters, theexpanding economic, political, and cultural ties with the non-Communist world in time will probably influence the regime to allow morefor the Rumanian people. ound economyightly knit and determined leadership,Rumania gives every indication of continuing to be Independent In Soviet bloc affairs as well as in its relations with the west.

Satlvlat Leadership

Rumania's policy of movingosition of Independence from the USSRogicalof the backgrounds and postwar experiences of tneleaders. The key figures In the Rumanian Workers' Party arc predominantly nativlsts. Party FirstCheorghe Gheorghlu-bei may well have escaped the Stalin purges ofecause he was held in Rumanian royalist jails during that period. In contrast to most parties inEurope, which purged their "Tltolst" elements In thend, theparty purged the Moscow-trained element. Ana pauker's expulsion from the polltburo In2ood example.

-Ttiib reportprepared jointly with the Office ofand Reports. An earlier version, datedas given very limited distribution as CIA nemorandum OCI No..

In the decade after World War II, Dej built up acult of his own notthat of Stalin. Re has given only lip service tode-Stallnlaatlonand in Rumania the harsher methods of authoritarian rule are still in vogue. By the, Bucharest hadolicy of reserve, characterised by belated and unenthuslast ic support, on almost all keypolicies.

Economicthe PToc

The first indication that Rumania intended toore Independent economic position appeared In on the Six-Year, Gheorghlu-DeJ stated that trade with "socialist" countries (which had accounted forercent of total Rumanian tradeould make up onlyf the total negotiations with bloc partners in connection with the

economic planead not satisfiedRumanian 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 saae time, theregime was dissatisfied with its economic position In the bloc on two other counts. Development of foreign trade with the bloc had been sluggish for several years, and theperhaps became convinced that It had to expand its trade with the free world appreciably if it was to achieve highgrowth rates duringeriod. Secondly,extensions of credit toinotaled5 million, much less than those received by most other East European countries. Thisseemed unfair, particularly in the light of Stalin's earlier exactions from the Rumanianthrough reparations andfrom the joint Soviet-Rumanian companies.

No Soviet credit is known to have been extended to Rumanialthough onewas promised for theGalati steel combine.from the more developed Bast European countries also had been small. On the other hand,West European countriesto expand their markets in Rumania9 by extending small credltB for Industrialfirst provided by the free worldecade.

Bucharest's Defiance of cema

Rumania's determination to assert its national economic interests was not revealed fullyhen the leadership successfully opposed efforts to broaden the powers of theCouncil forMutual Assistance (CEMA) and disregarded Sovietto the building of the Galati steel plant.

The USSR and some Eastregimes, trying tonew stage" in bloc economic cooperation, had proposed closer coordination of national plans, more Joint investment projects, and more extensive productIn manufacturing. Moreover, Khrushchev had proposed formationoint planning staff for CEMA. The Rumanians fearedEMA with greater authority would make decisions which would hamper Rumanian Bucharestopposed any change in the organization that would limit Rumanian economic sovereignty.

Other satellites probably were also opposed to theproposalEMAstaff, but Rumania alone was publicly hostile. Rumania, in addition, refused to accept some new forms of cooperation which were supported by other satellites.

Although the USSR agreed0 to provide certainfor the Galati steel project and to Increase deliveries


iron ore, it presumably bad misgivings about the projectof Rumania's inadequate domestic supplies of iron ore and coking coal. These doubts become stronger later, possibly becauseeduction ofsteel requirements in the bloc. Nevertheless,EMA meeting last July,reportedly reaffirmed its plan to proceed with the Galati project. It had alreadya plate mill from aconsortium and had opened negotiations for theof other steeimnkingin the West. The DSSR not only failed to alterplans for Galati. but it now has apparently committed itself to provide the blooming-slabbing mill, the sheetmill, and additionalof Iron ore, previously promised.

Success of Economic Policies

Bucharest's more recent moves toward greaterhave been encouraged by the regime's satisfaction with its economic accomplishments0 and by its confidence in future progress. Withlittle foreignRumania has made great strides in industrialization. In contrast to the slowdown In Industrial growth in most of Eastern Europe, Rumaniaan average annualgrowth rate ofercent0iving it one of Europe's highest rates of over-all economic growth in recent years.

This high rate stems partly from Rumania's relatively low degree of industrialization. In contrast to highlycountries such as Eastand Czechoslovakia, Rumania still has large reserves oflabor and manyfor simple advances In technology.

oreover, growth has been stimulated by an improved agriculturalandapid expansion of foreign trade, especially with the West. Agricultural production leveled off near the postwar peak, avoiding the sharp fluctuations of previous years. Collectivizationfood exports by tightening state control over agriculture, while the depressiog effect it usually has on agriculturalwas offset by technical advances.

Rumania is capable ofa rapid, althoughsomewhat reduced, rate of economic growth In the nextyears.

Declaration of Independence

The Rumanian regime's now more definitive declaration of its right and intention to act Independently In the Communist world came in the formesolution adopted by ansession of the partycommittee which met fromopril. Buchareststated that It would not participate in anyCommunist economic or


organizations, which It considered infringements on the sovereignty of socialist states. It also Insisted that "there can be no partlea which are 'superior* and parties that arend thatcan decide what Is and what is not correct for otherand parties."

Effecta of Domestic Policies

Although the Rumanianin Its relations with the Soviet bloc seems to have movedosition not unlike that of Yugoslavia, it remainsconservative,in regard to its domestic policies. There Is no evidence of Ideological deviation toward the more decentralized Yugoslav economic system, about aspects of which the Czechs and even the Bulgarians have permitted some public discussion. On the contrary, the Rumaniansystem continues to be characterised by detailedplanning and nearly complete socialization of agriculture.

Although Bucharest hasarge number ofprisoners this spring, It has made clear it does not contemplate any liberalization on the domestic political scene comparable to the changes which have come about in its relations with the Soviet bloc and with the lest. Nevertheless, under the guise ofthe Rumanians considera Latin island in the sea ofhasumber of steps thatto the population and will whet its appetite for somein domestic policy.

De-Russlfleation Campaign

The campaign for de-Rus-slflcatlon of Rumanian lifeInhen Bucharest publicly criticized the USSR for underplaying in an officialthe role of the Rumanian party in liberating the country from the Germans. By the endoscow was seldomIn Rumanian propaganda at* aiding Rumania's progress. Last spring the party spread the news throughout the country of the hej regime's defiance ofeconomic policies, thereby appealing to popularsentiments which bold Russia toraditional enemy. During the May Day celebrations3o posters of living Soviet leaders were in evidence.

Dej's de-Ruselflcatlonhave included several that directly affect the public. Inor example, language courses in school1 were made elective rather than mandatory. At the same time tbe "Maxim Gorki"of Language and Literature in Bucharest was abolished. Inublicationsstressing the Roman origins of the Rumanian language. In addition. Radio Bucharest has markedly curtailed Its rebroad-castlng of Soviet radio programs.

Closer Ties With the west

As Rumania has moved greater economic Independence,


political and culturalwith the West haveincreased, thusanother influenceless rigid domestic policies.

In march IMS, the regime agreed to the distribution by the US Legationonthly cultural bulletin, which began In Hay. Two months later Rumania stopped jamming western Rumanian officials are removing long-standing irritants by granting exit vlaas to dual nationals, and are encouraging Western governments to raise the rank of their diplomaticin Bucharest,

Trade with the non-Communist world, mainly West Europeanroseercentnd accounted for nearly one third of total tradeompared with one fifthhus, the reorientation of trade toward the West that had been planned5 was realised four years early. This increased share of trade with the West vas maintainedrom still incomplete data--agalns total Rumanian trade continued to expand rapidly.petroleum, forest, and food products have proved to be readily salable in Western Europe. This ability to boost exports to the West baa been enhanced by resourcefulness In finding new markets and, In some Instances, by arranging profitable barter deals through private traders.

AsLdo from giving Rumania greater flexibility In economic planning, closer economicwith the West have brought the benefits of advancedand medium-term credits for certain new Rumanian Preference for Western technology has even led Rumania to place orders in Westernfor equipment that the more developed satellites wanted to supply. urvey by the US Legation last September Indicated that Western-supplied plants valued at0 million had been contracted for or built in Rumaniand that the regime was contemplatingpurchases of more0 million.

Rumania has receivedcredit terms for somefrom Western Europe, with repayment periods of an much ie six years. Although Rumaniaa cumulative trade illion with the free world, agrowth of exports3 apparently restored the balance. This should Improve Bucharest's chances of obtaining additional Western Europecredits If they are needed.

Rumania seems to have a

considerable potential forto increase exports to the West. It will be difficult, however, to sustain the rapid pacenlessproduction can be raised above the recent plateau.

Rumania now Is pushing for more normal trade relations with the US. At Bucharest'sigh-ranking Rumanianwill begin negotiations in

Washington onay to improve bilateral economic andrelatione. In conversations with high US officials, Rumanian leaders have said they hopeubstantial rise in trade. Bucharest has Indicated,that it Is not looking for handouts and that it can readily obtain needed goods elsewhere If the US doee not loosen its export restrictions.

Rumania's determination to pursue its own economiceven when thesewith those of the Soviet bloc, has also been apparent la the performance of thedelegation to the UNon Trad* andwhich is currently sitting in Geneva. They have portrayed Rumaniaeveloping country whose interests lie with the less developed and, for the most part,nonalignod countries at the conference. Moreover, the Rumanians, unlike other East European representatives, hav* not broadly attacked Western trade restrictions againstcountries, have notthe Soviet-sponsored proposalnternational trade organization, and have notraft proposal of "trade principles" submitted by the USSR, Poland, and

Sovtet disputeargaining point in concert with thearising from itsrelations with the West. Sincehen Rumania sent its ambassador back to Albania after having withdrawn him in1 as bad other Soviet bloc states, Rumania has been more reticent than any other Eastern European countrysupport for Moscow against Petping. Bucharest essentially agrees with Moscow's substantivebut Is apparently even more concerned than Poland or Hungary over the probableon its bargainingwith the USSR shouldcarry the dispute with Chinainal break.

In recent months, Rumania has printed numerous articles agreeing with Moscow'scoexistence line, but has done little to criticize Pei-plng for not adhering to this line. It has also failed to support Moscow's plans forwith tbe Chinese. DeJ has absented himself from meetings particularly concerned with the dispute, such as occurred during the East German party congress inhe celebration of German party chief Ulbrlcht's birthday the following June, andh birthdayonth ago.

and the S1 no-Soviet "Dispute

Rumania has used Moscow's need for support in the Slno-

In February andhe Rumanian party attempted to prevent the dispute from moving furtherormal split


ediation effort, which included sending aol Ita leaders tot China, North Korea, and the USSR. When this effort failed, the Rumanians madethe details of their attempt and recommended that themovement form athat would include the Soviet and Chinese parties to

Induce the two major parties

to ease tensions.


The Dej regime. In its show of Independence, Is apparently convinced that the USSR cannot

apply strong political pressure or economic sanctions and that It will not Intervene militarily. Moreover, Rumania probably will continue to receive at least tacit backing for its stand from some other East European leaders who fear that closer economic control by the USSR eventually slgnt work to their disadvantage as well. It seems likely, therefore, that Rumania will increasingly demonstrate its Independence In pursuing its national interests in itswith both trie bloc and the free world. (SECRET)

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