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Current Support Brief
KHRUSHCHEV'S ECONOMIC OFFENSIVE AND ITS CRITICS
CIA/RR3
CENTRAL INTELLIGENCE AGENCY Office of Research and Reports
KHRUSHCHEV'S ECONOMIC OFFENSIVE AND ITS CRITICS
The sharp decline- in new Soviet economic aid extensions from annual commitments of more0 million9 and0 to less5 million2 and to onlyillion thus far this yearas cast some doubt on the future course of Moscow's foreign aid program in underdeveloped areas of the Free World. However, the rapid pace of implementation of creditsrawings, which were relatively small durng the early years of the program, have risen rapidly In recent yearseak0 millionuggests that the lag in new extensions may be less attributable to immediate problems of resource allocation than to some longer range reevaluation of the foreign lending program itself. Evidence ol internal problems over the allocation of resources for commitments by the USSR in heavy industry, consumer welfare, military and spaceand support for its Bloc partners, coupled with some disappointing results of the program in Africa. Iraq, and elsewhere, might well haveolitical issue over foreign aid entirely incommensurate with the economic costs of the program andavorable atmosphere for the expression of an increasingly vocal "anti-give-away" sentiment among Communist Party elements both at home and abroad.
That Khrushchev's policy of trade and aid has not gone uncontested is perhaps best reflected in the frequency with which the leadershiphas been obliged to seek the public forum to defend it. Although the specific sources of contention are still matters for speculation and have not yet become the subject of public debate, it seems probable tbat such differences, and the repeated efforts to quell them, would not have arisen unless the current program was being seriously questioned.
I "Anti-Party" and "Ami-Give-Away"
Perhaps the clearest intimation of differences over Soviet foreign economic policy was provided. Saburov's speech9 att Congress of the Communist Party of the Soviet Union (CPSU). Pravda's failure to print the speech indeed the elimination
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by Pravda of any reference to Saburov's sutement in its publication of the full texts of every other speech delivered at the Congressas perhaps indicative of Khrushchev's reluctance to give much publicity to any opposition to the regime's program of economic assistance to underdeveloped countries, when he himself had declared at thethat "the Soviet Union and other socialistreand wiU continue to extend economic assistance torief Tass summary. Saburov's speech appeared for the first time some months later in the stenographic report of the Congress. In it he charged the "anti-Party" group, of which he was an admittedwith "having opposed or tried in every way lo obstruct the adoption of decisions on important problems of foreignaburov continued:
In particular, it opposed the Central Ccwaittce's policy in such important problems as the necessity of developing our economic ties vith the People'sand extending aid to these countries, to soy nothing of our aiding the poorly developed andcountries of Asia and the Near East. 1/
Although the specific sources of contention are still matters for speculation, it seems likely that opposition has been directed at the "new look" in Soviet foreign economic policyhe dramatic entry of the USSR into the foreign lending field. The explicit connection by Saburov of the "anti-Party" group with such opposition suggests that Khrushchev's trade and aid program may have caused some concern among more conservative Party elements who, aware of equipment needs at home, question the economic "profitability" of any large-scale export of capital resources that might slow the pace of domestic capital formation in exchange for foodstuffs and consumer goods which are of relatively low priority on an orthodox Soviet planner's preference scale.
The Soviet leadership has sought repeatedly to reply to suchon the basis of the wider perspectives of "proletarianduty.explaining that Soviet aid was not designed to be very "profitable" from the commercial point of view. "If one approaches the matter from this commercial side only, it would be profitable for the USSR to build new factories in its own country with these funds and then export the finished/ imilar vein, Khrushchev has given the following explanation:
Although the Soviet Union and other socialistconsider it their duty to help underdeveloped countries and to extend trade and all other forms of economic relations with then in every way, naturally in their case we cannot say that our economic relations are based on mutual advantage. Generally speaking, from the commercial point of view, our economic and technical assistance to underdeveloped countries is evenfor us. 3/
In spite of more recent protestations of the necessity to extend economic aid even at the cost of considerable self-sacrifice, reports from Moscow allude to recurrent evidences of popular disinterest in foreign aid and even the lettors-to-the-editor columns of Pravdahave been employed to encourage lagging public support for the program. 4/ ecent conversationSoviet diplomat admitted (a) that there was strong opposition in the USSR to foreign aid; (b) that many people felt that for the amount of moneyon the Aswan Dam. for example, "seven or eight" projects of similar magnitude could be completed in the USSR; and (c) that the Egyptians "are not worth it. " He also asserted that such attitudes wouldefinite impact on Soviet foreign aid programs in the future. 5/
Communist Opposition
development ol the Sino-AJbanian dispute with thearty Congress has provided additional insight into Albanian objections and motivations on the subject of foreign aid. Scarcely had the Congress concluded its sessions, when Radio Prague, onharged the Tirana regime with attempting to tell the USSR. Czechoslovakia, and other socialist countries whom they should assist and whom they should not. The Albanians were accused further of predicating their opposition to foreign aidbasically incorrect" view of the international situation in that "they strongly opposedto young Asian and Africanhat are not members of the socialist camp, asotential enemy. " One week later the Czech publication Praceeporting abetween economists and trade unionists, reproduced the following comment:
The Albanian leaders have strange Ideas about socialist InternationalIs*. Aaong other things they want ua, for instance, primarily and first of all to assist only the needy countries of the socialist camp and then soase time in the futurewhen these countries no longer need assistanceto help the othercountries. Assistance to underdevelopedhowever, is an integral part of our concept of internationalise..
A similar theme was expoundedajor article on Soviet-Albanian relations by Konstantinov in Kommunist in which Moscow made explicit Albanian (and, by the clearest implication, Chinese) objections to large scale Bloc aid to underdeveloped countries. The author reminded his readers that Albania "received from the USSR and other socialistaid and credits worth hundreds of millions of rubles" but that, ultimately, it began to make "inordinate demands" on the USSR and other socialist countries, "rather peculiarly interpreting theprinciple of brotherly cooperation and mutual aid as aresponsibility of other socialist countries to satisfy all their
economic demands. " Indeed. Konstantinov continues, this "nationalist narrow-mindedness and egotism of Hoxha and Shehu also foundin their resentment of the aid rendered by the Soviet Union and other socialist countries to underdeveloped countries of Asia and Africa." Obviously, he continued, the Albanian leaders "do notthe role of the neutral countries in the struggle foror do they understand that aid to such countries extends the "anti-imperialist/
More recently, inravda reiterated ita charges against "dogmatists and sectarians" who seek to "ignore the significance of economic aid by Socialist countries to underdeveloped states and to distort the results of this aid. " In apparent reply to Chinese allegations lhat indiscriminate Bloc aidnational bourgeois" government serves only to consolidate that government's position and hinders rather than assists revolutionary prospects in these countries, Pravda maintained: "Only people (who arej unable to assess the nature of the changes wrought on the world by the rise of the socialist system argue that any country liberated from the colonial yoke whose power is not in the hands of the working class will necessarily follow the capitalist path and therefore strengthen the position of world capitalism. " What such people ignore, the article in Pravda alleged, arc the active encouragement of the forces of socialism in these countries rendered by the effective assistance and example of the socialist countries and the deep contradictions that existetween the "national bourgeoisie" and
An undercurrent of resentment against the alleged burden of foreign economic assistance is evident in other countries of Eastern Europe. An articleecent journal of the Hungarian Communist Party addressed itself to "comrades in our Party who do not understand the necessity of aid to young national states. " Although apparently denying the claims of "some" lhat the Bloc has an obligation to increase such aid "even at the expense of their own economies" (ostensibly the position of Khrushchev as expressed in the quotations alreadyn grounds that suchwould cause the socialist countries to "fall behind in thewith imperialism,eadhift in power relationships to the benefit ofndreatly endanger theof the weakly developedhe author appealedider understanding of the political implications of Bloc aid. 8/
In Czechoslovakia, whose commitment to foreign aid (citherer capita basis orercentage of gross national product) is the highost in the Bloc and where shortages of foodstuffs and consumer goods have already caused some worker dissatisfaction, there are persistent reports of popular resentment against foreign aid. and particularly aid to Cuba. Indeed it haa been reliably reported that President Novotny hastrong plea lo Khrushchev (reportedly rejected by tho Soviet Premier) that Czechoslovak commitments of aid to developing countries be reduced in view of the state of theoconomy.
3- Tentative Conclusions
Latent opposition to the ambitious Soviet foreign lending program iseripheral issue in the USSR andeflection of more fundamental internal Communist debates over resource allocation and questions of world Communist strategy generally. Nevertheless, this opposition may encompass tbe common interests shared by those who are inclined toward traditional priority development of heavyby those who oppose any diminution of conventional military forces, and by those whoore aggressive posture toward the West as well as by the public at large for whom often-promised improvement in tho standard of living must once again be postponed because ofstrains on the nation's resources. Moreover, such dissident voices can find ample encouragement among Chinese. Albanian, and other foreign Communist leaders, who generally distrust national bourgeois governments in underdeveloped countries and who give only nominal support to tho idea of economic aidignificant factor in the national liberation struggle.
There is no firm evidence that the current Soviet leadership has revised any of its fundamental assumptions with respect to its policies in underdeveloped areas. It has sought, in fact, to reassert withvigor the true militancy of its doctrine of coexistence and the implicit connection of that doctrine with the wider political objectives of the national liberation movement. However, in view of the modest political gains that can be directly attributed to foreign aid. economic
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within the Bloc, and the recurrent evidences of opposition to the program among Communist Parly elements both at home and abroad. Khrushchev himself may have comeealisation of the limited potential of the economic offensiveactor of Communist strategy in underdeveloped areas. The decline in new aid extensions mayore critical appraisal by the Soviet leadership of its aidan appraisal in which tbe politico-strategic returnswith foreign aid resources expended are subjectorecalculation.
Some modifications in Soviet aid policy may already be in evidence. There haserceptible hardening of the Soviet line toward some "bourgeois nationalist" leaders together with demands that underdeveloped countries either rely more on their own resources or seek more aid from tha West and the UN. Moreover, in contrast to the preeminent role tbat hitherto has been accorded the Bloc aid program, recent Soviethas emphasized trade rather than aid as Ihe more decisive factor in securing and maintaining the "economic independence" of new states.
Original document.
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