FINANCING OF SOVIET FOREIGN TRADE IN 1961

Created: 6/12/1962

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22 Copy No.

OF SOVIET FOREIGN TRADE IN1

HISTORICAL REVIEW PROGRAM RELEASE AS8

CENTRAL INTELLIGENCE AGENCY Office of Research and Reports

FINANCING OF SOVIET FOREIGN TRADE1

Preliminary foreign trade returns1 recently released by the USSRill show that total Soviet foreign trade1 amounted*illion,ercent more than the level Thus, for the secondyear, Soviet foreign trade failed to register the significant Increases of thes. The decline in Soviet trade with Communist China was an important factor in the relatively small growth of trade, aa it had beennd Soviet trade with the Sino-Soviet Blochole actually declined The increase ln over-all trade was, therefore, largely attributable ubstantial growth ln Soviet trade with non-Bloc countries (see Table 1)

The decline ln Soviet trade with Communist China5 million09 million1 stemmed from declines0 million in exports (chiefly machinery and equipment)0 million in Imports (principally products of agricultural/ The decline0 million ln Sino-Sovlet trade more than offsot the increase0 million in Soviet trade with its European Satellites, resultingrop in Soviet trade with the Sino-Sovlet Bloc1 compared 8 billion leveln fact, was approximately the same as that 9 ln spite of an Increase in Soviet-Satollite trade of more thanillion lnear period.

Perhaps the most significant feature of the foreign trade of the USSR1 was the precipitate increase in ita trade with non-Bloc countries. Although Soviet trade with the Bloc has stagnatedrade with the non-Bloc countries has increased by30 million1 alone. Most of the stimulus for the growth In Soviet trade with the non-Bloc world8 has been the Increase in Soviet commercial exchanges with the industrial West stemming largely from Sovietof capital goods for Its Seven Year. In the meantime, Soviet trade with the underdeveloped countries has been more or less stagnant, with theof Cuba, Although preliminary datay the USSR provide no breakdown of Soviet trade with individual countries or areas, it ls believed that this trade with the underdeveloped countries increased asoi more than trade With the Industrial West. This Increase was chiefly attributableise of approximately

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illion ln Soviet trade with Cuba, thus making Cuba the leading non-Bloc trading partner of tbe USSR. If trade with Cuba is deducted, it is estimated that Soviet trade vith the other undeveloped areas increased only marginally above the level

Soviet exports to non-Bloc countries Increased by more0 millionhile imports from that area increased by less0 million. Consequently, the USSR mitigated considerably its adverse trade balance0 (see In that year,esultonsiderable increase in imports from the non-Bloc world, particularly the industrial West, the USSRrade deficit unprecedented in the postwar period. Collateral evidence suggests that, aside fromubstantial part of the increased exports1 (chiefly products such aswood, and grains) were destined for the industrial Vest, and the USSR restored its traditional export surplus with that area (see Imports from the industrial West appear to have increased only marginally, and the bulk, if not all, of the increase ln imports from the underdeveloped areas originated ln Cuba. Cubaubstantial share of Increased Soviot exports to the underdeveloped areas.

The USSR traditionally relies on foreign exchange earned from its trade with such countries of the Industrial West as the UK to help flnanco purchases of raw materials from overseas sterling areas and other underdeveloped areas with which it normally incurs large deficits. This deficit Is believed to have amounted to0 million1 (see The easing of the deficitowever, failed to havo much Impact on the level of gold sales by the USSR, at least in the first half1 when the bulk of the estimated total for the year of0 million was sold. On the other hand, many of these sales early1 may have been occasioned by tbe need to settle short-term obligations incurred In that year the USSR sold little more0 million ln gold ln spiteounting trade deficit, and it Is believed that much of the deficit was financed through medium-term credits, short-torm borrowing on the European money market, and the drawing down of foreign exchange holdings earned from exceptionally large gold sales

In tho latter halfery little gold was sold, and except forillion sale inhere

June 2

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were no reports of Soviet gold nppaaring on Western markets until This situation apparently la aof the successes of tbe USSR in expanding its merchandise exports1 and of the continuing availability of medium-term credits from Western suppliers. Western medium-term government-guaranteed credits to the USSRbyillion in the first half/ If the performance0 vas repeated, there ls every reason to believe that anillion actually was utilized by the USSR ln the latter half

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Soviet Foreign Trade01

Million PS $

Exports Imports Balance Exports Imports Balance

Total

167

Bloc

Satellites Communist China Asian Satellites

7

Vest Underdeveloped countries Unaccounted for

8

J- Because ol rounding, components may not add to the totals sho

orillion.

Table 2

Soviot Balance of Trade with the Industrial West and the Underdeveloped

Million US $

6 8 9 0 1 a/

Industrial 0

Underdeveloped countries 2 5 2 0

Estimated.2

CIA/RR

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Sources:

3.

Central Statisticalodu (USSR ln Figures,

U.

USSR, Ministry of Foreign Trade, Scientific Research Market Survey Institute. Byulleton' lnoatrannoy kommorcheakoy lnf ornuitsll, pri lozhenlye no 4 (Bulletin of Foreign Commercla 1 Information, Supplement No. oscow,.. * i

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