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The Soviet and East European Foreign Credit Program
Published online by Cambridge University Press: 25 March 2019
Extract
During the past three years the USSR and Eastern Europe have embarked upon a credit and technical assistance program in several underdeveloped countries in the Free World. These activities are not an aid program in the Western sense. Rather, they consist, except for a few small gifts and a token $1,400,000 contribution, through the United Nations, entirely of loans with specific repayment terms. The significance of the Soviet and East European program lies in its economic nature and its dual—economic and political—motivation and effect.
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- Copyright © Association for Slavic, East European, and Eurasian Studies 1957
References
1 No complete listing of loans is available. Several documents are valuable as partial descriptions: Foreign Assistance Activities of the Communist Bloc and Their Implications for the United States, Senate Foreign Relations Committee (Washington, Government Printing Office, 1957); The Soviet Bloc Role in Free World Economic Enterprises and Development Projects, Economic Defense Advisory Committee Report, International Cooperation Administration (Washington, State Department, 1956); Soviet Technical Assistance, Staff Study No. 7, Subcommittee on Technical Assistance Programs, Senate Foreign Relations Committee (Washington, Government Printing Office, 1956); and Foreign Policy and Mutual Security, Foreign Affairs Committee (Washington, Government Printing Office, 1956); World Economic Growth and Competition, Hearings, Joint Economic Committee, U. S. Congress (Washington, Government Printing Office, 1957).
2 Survey of East-West Trade in 1955, Eighth Report to Congress, Mutual Defense Assistance Control Act of 1951 (Washington, Government Printing Office, 1956), p. 32.
3 This does not mean that the East European countries are net creditors. Each has borrowed from the USSR far in excess of its loans to other countries. The USSR, neglecting its repudiated debts, is now a net creditor.
4 Pravda, July 27, 1956; Christian Science Monitor, October 18, 1956; Washington Post and Times-Herald, October 24, 1956.
5 Hon. Robert Murphy, Deputy Undersecretary for Political Affairs, State Department, stated in October, 1956, that the figure was $1,300,000,000. His data are close to those given here. The $126,000,000 Indian loan was not negotiated until November, 1956. See Foreign Policy and Mutual Security, op. cit., pp. 188-9.
6 Mysindia (Bangalore, November 18, 1956), p. 4; Michael L. Hoffman, “Problems of East-West Trade,” International Conciliation, No. 511 (January 1957), pp. 272-3.
7 Since most of the arms are obsolete so far as the bloc armed forces are concerned, putting a value, beyond scrap value, on them is a dubious procedure. To the recipient country, however, these arms represent considerable value in the form of products which could otherwise have been sold on export markets.
8 Mikhail Nesterov, USSR, Illustrated Monthly, No. 5, (Washington, D. C , 1957), p. 1. The loans to its European satellites and to China may have an inflated value since there is no certainty that world market prices hold within the Soviet sphere of economic and political influence.
9 The interest rate does not seem to have any economic meaning and is probably politically motivated, set so as to embarrass the West which finds so low an interest rate economically unsound. It is worth noting that even a slight over-pricing of Soviet goods could more than offset the advantages of the low interest rate. The terms of loans seem to lengthen the more reliable the USSR feels its position in a country to be.
10 “These conditions are not unlike loans by such countries as the United States and Great Britain. Unlike Western loans, however, debtors must buy through a state trading monopoly and may purchase only those items which the Soviet or other bloc governments choose to make available.
11 Testimony of Professor Max F. Millikan, Director of the Center for International Studies, Massachusetts Institute of Technology, before the House Ways and Means Committee, Washington, D. C , September 24, 1956, on “The Soviet Economic Campaign Towards the Free World.“
12 Mysindia, op.cit., p. 4.
13 Testimony of Dr. Hans Heymann, RAND Corporation, reported in World Economic Growth and Competition, op.cit., p. 125.
14 Current History, February, 1956, p. 115; The New York Times, December 19, 1955; New York Herald Tribune, May 20 and 21, 1956.
15 Pravda, March 4, 1956; Washington Star, March 11, 1956.
16 Soviet Technical Assistance, op.cit., p. 9.
17 Izvestia, October 10, 1954.
18 The New York Times, July 30, 1955.
19 The New York Times, November 2, 1955; The Soviet Bloc Role … , op.cit., p. 3.
20 London Times, September 27, 1956; The New York Times, October 28, 1956; Middle East Journal, Winter, 1957, pp. 71-2.
21 Little of the $100,000,000 loan has been used so far. For an analysis of the implications of Soviet activities in Afghanistan and Afghan motivation see “Afghanistan: Wooed But not Won,” Robert Loring Allen and Rouhallah K. Ramazani, Swiss Review of World Affairs, October, 1957, pp. 16-19.
22 The New York Times, March 11, 1956.
23 Pravda, December 19, 1955.
24 Walter Z. Lacquer, “The Moscow-Cairo Axis,” Commentary, May, 1956, p. 412; Washington Star, May 11, 1956, September 2, 1956; The New York Times, November 12, 1956; New York Herald Tribune, April 10, 1957.
25 New York Herald Tribune, April 10, 1957.
26 Washington Post and Times-Herald, April 18, 1956; Survey of East-West Trade in 1955, op.cit., p. 16.
27 Foreign Assistance … , op.cit., pp. 91-95.
28 Washington Star, May 11, 1956, September 2, 1956.
29 The New York Times, June 18, 1956; New York Herald Tribune, June 18, 1956.
30 The New Tork Times, July 21, 1956, July 22, 1956, July 28, 1956.
31 The New Tork Times, October 17, 1956, quotes Nasser as saying that the “Russians are ready to give Egypt long-term loans” to build the Aswan High Dam.
32 Baltimore Sun, March 27, 1956; The New York Times, March 28, 1956.
33 For a more complete discussion of Egyptian and Middle Eastern relations with the bloc, see the author's Middle Eastern Economic Relations with the Soviet Union, Eastern Europe, and Mainland China, University of Virginia Press, 1957.
34 Survey of East-West Trade in 1955, op.cit., pp. 90-2; Foreign Agriculture, October, 1956.
35 The New York Times, February 3, 1955; United States News and World Report, February 11, 1955; New York Herald Tribune, April 3, 1956; The New York Times, November 16, 1956; Christian Science Monitor, December 4, 1956.
36 Foreign Assistance … , op.cit., pp. 103-09; The Soviet Bloc Role … , op.cit., pp. 31-36.
37 Survey of East-West Trade in 1955, op.cit., pp. 87-93; Christian Science Monitor, April 2, 1956; The New York Times, May 21, 1956; New York Herald Tribune, June 19, 1956.
38 The New York Times, May 25, 1956.
39 Washington Post and Times-Herald, July 25, 1956.
40 Christian Science Monitor, July 23, 1956.
41 The New York Times, August 10, 1956, reports 42,000 tons had arrived with 86,000 tons yet to come. The cement is packaged in paper bags and has been stored in sheds, hardly adequate for protection against monsoon rains. Subsequently some of the cement was sold to India, but at a loss to Burma.
42 The New York Times, August 5, 1956; Mysindia, op.cit., p. 4.
43 Washington Post and Times-Herald, September 15, 1956; Christian Science Monitor, September 24, 1956.
44 Soviet Technical Assistance, op.cit., pp. 31-32; Foreign Assistance … , op.cit., pp. 110-12
45 Survey of East-West Trade in 1955, op.cit., pp. 86-93.
46 The New York Times, August 3, 1956, February 15, 1957, and July 31, 1957.
47 The New York Times, April 28, 1956.
48 Survey of East-West Trade in 1955, op.cit., pp. 92-3.
49 The brief summary for Afghanistan, Egypt, India, Indonesia and Yugoslavia does not include many transactions with underdeveloped countries or even all of the credit transactions in these countries. For a more complete but still partial listing see Soviet Technical Assistance, The Soviet Bloc Role …, and Foreign Assistance . . ., op.cit.
50 Survey of East-West Trade in 1955, op.cit., pp. 31-33.
51 Soviet Technical Assistance, op.cit., p. 2, and 29; The New York Times, May 2, 1956, and May 6, 1956.
52 The use of bloc engineers and equipment and projects and the training of technicians from underdeveloped countries by the bloc tends to establish a part of the country's economy upon a bloc technological base, even aside from the possible political activities of bloc personnel.
53 The Mew York Times, September 5, 1956.
54 Modern complex industrial equipment requires a steady flow of spare parts as well as maintenance and supervision by personnel familiar with the equipment. Continuing assistance may be necessary to the countries who purchase bloc capital goods on a large scale. In addition, expansion of some industries in the bloc, cotton for example, may eliminate its demands to obtain the product in trade.
55 Abram Bergson, Roman Bernaut and Lynn Turgeon, “Prices of Basic Industrial Products in the USSR, 1928-1950,” Journal of Political Economy, LXIX, No. 4 (August, 1956), 303-28.
56 Abram Bergson, editor, Soviet Economic Growth, Row, Peterson, Evanston, (1953).
57 The National Economy of the USSR, a Statistical Compilation, Central Statistical Administration (Moscow, State Statistical Publishing House, 1956), pp. 223-4; Survey of East- West Trade in 1955, op.cit., pp. 95-98.
58 Political Economy (Moscow, Academy of Sciences, 1954), p. 391.
59 See “Soviet Russia and the Underdeveloped Countries: Trade and Aid,” by the author in The World Today,May, 1957, pp. 207-19.