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Economic Aid Flow from the USSR: A Recount of the First Fifteen Years

Published online by Cambridge University Press:  27 January 2017

Janos Horvath
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Since the inception in 1954 of Soviet economic aid to non-Communist underdeveloped countries, commitments have grown to over $6 billion and deliveries to $2.7 billion. Concomitantly an extensive literature on the subject has emerged. Per unit of aid money, the attention paid to the Soviet programs is much greater than for a comparable flow of resources from other countries. Undoubtedly circumstances that go beyond conventional considerations about international capital flows are responsible for this interest. Writers take various approaches, such as the motives of the donor, contract terms, contribution to the development of recipient countries, impact on alignment with bloc politics, and so on. With few exceptions the investigators attempt, one way or another, to estimate the payoffs accruing to the donor from such international transfer of resources. Yet there is no comprehensive record that could serve as a basis for the numerous appraisals and evaluations. Ironically, at the milestone of one and a half decades of Soviet aid activities the "authentic" sources on the subject still use varying figures.

Type
Articles
Information
Slavic Review , Volume 29 , Issue 4 , December 1970 , pp. 613 - 632
Copyright
Copyright © Association for Slavic, East European, and Eurasian Studies. 1970

References

1. This writer has had a share in attempting appraisals of economic aid in the mirror of various criteria. See Janos, Horvath, “International Grants as Policy Instruments : The Case of the USSR,” in The Grants Economy in an International Perspective, ed. Boulding, Kenneth E., Horvath, Janos, and Pfaff, Martin (Belmont, Calif., 1971).Google Scholar

2. In contrast, economic aid projects of the other major donors have been continuously reported by the statistical bureaus of the respective countries, as well as by international organizations such as the United Nations, OECD, Colombo Plan, and so forth.

3. For example, Berliner, Joseph S., Soviet Economic Aid (New York, 1958), p. 193 Google Scholar; Goldman, Marshall I., Soviet Foreign Aid (New York, 1967), p. ix.Google Scholar

4. See, for example, U.S. Department of State Research Memorandum, RSE-65, Sept. 5, 1969, where it is listed that the USSR has committed to Afghanistan $697 million in economic aid. See also U.S. Congress Joint Economic Committee, Soviet Economic Performance : 1966-67 (Washington, D.C., 1968), p. 127 Google Scholar ($570 million plus $127 million new commitment during 1968 equals $697 million).

5. For instance, what appears to be the first case of overstatement resulted from a $40 million military-aid delivery in 1956 that had not been clearly separated from economic aid in some of the current communications. The second error can be traced back to the addition to the list, on the basis of an IMF (International Monetary Fund) report, of $125 million that had been incorporated already.

6. Goldman, Soviet Foreign Aid, pp. 115-23; United Nations, Statistical Yearbook, 1968, pp. 693-99.

7. It appears from the data for 1969, so far unconfirmed, that this year witnessed aid extensions below the average. The sum of commitments, $399 million, is composed of the following items : (1) Congo (Brazzaville), April 1969, geological survey, hospital, industrial plants (twelve-year loan with 2.5 percent interest, $12 million); (2) Uganda, August 1969, construction of cotton spinning mill at Lira ($14 million); (3) Turkey, October 1969, construction of iron and steel works at Iskenderun (fifteen-year loan, 2.5 percent interest, $263 million); (4) UAR, October 1969, three heavy industrial projects : phosphate plant near Aswan, aluminum plant and iron silicon plant at Helwan ($110 million). See International Financial News Survey, May 16, Oct. 17, Oct. 24, Nov. 14, 1969.

8. In addition to economic aid, the USSR offered to non-Communist underdeveloped countries military aid of approximately $4.5 billion during the fifteen years under study. According to Western estimates about half of this went to two countries, the UAR and Indonesia, while the full list of recipients includes, in declining order of magnitude, Iraq, India, Syria, Afghanistan, Algeria, Iran, Yemen, Pakistan, Morocco, Somalia, Cyprus, Nigeria, Ghana, Guinea, Cambodia, Uganda, Tanzania, Mali, and Congo (Brazzaville). Nevertheless, this present recount does not incorporate military aid figures, and they are not considered in the subsequent analysis.

9. U.S. Congress Joint Economic Committee, Soviet Economic Performance : 1966-67, pp. 125-26.

10. United Nations, Statistical Yearbook, 1968 (New York, 1969), pp. 695–700 Google Scholar; OECD, The Flozv of Financial Resources to Less Developed Countries, 1956-1963 (Paris, 1964)Google Scholar.

11. Planovoe khosiaistvo, June 1961, pp. 74-83; U.S. Congress Joint Economic Committee, Annual Economic Indicators for the USSR ‘64 (Washington, D.C., 1964)Google Scholar; Janos Horvath, A Comparative Appraisal of Economic Aid, University Microfilms 69-9197, pp. 21-22; Goldman, Soviet Foreign Aid, pp. 23-59.

12. Recently analysts have attempted to sort out the grant-equivalent of aid by computing the present value of a transfer. See Goran, Ohlin, Foreign Aid Policy Reconsidered (Paris, 1966)Google Scholar; John, Pincus, Economic Aid and International Cost Sharing (Baltimore, 1965)Google Scholar; Martin, Pfaff, The Grants Economy : Unilateral Transfers in the U.S. and Global Economies (East Lansing, 1968)Google Scholar. A general theory of the “grants economy” will first become available in a forthcoming book by Martin Pfaff of the Brookings Institution

13. Little, I. M. D. and Clifford, J. M., International Aid (Chicago, 1965), pp. 132–33 Google Scholar; Mikesell, Raymond F., The Economies of Foreign Aid (Chicago, 1968), pp. 99–104 Google Scholar; Adler, John H., Absorptive Capacity : The Concept and Its Determinants (Washington, D.C. 1965)Google Scholar.

14. This attitude is reflected in a remark by a Russian official, who said that while he had been “happy and proud” to see the finest of Soviet electrical equipment in India, on his return home he asked : “Is such equipment common in our factories? Apparently not. Why is this so? See Plenum Tsentral'nogo komiteta KPSS, June 24-29, 1959; quoted in Milton Kovner, “Trade and Aid,” Survey, August 1962, p. 50.

15. For example, in a series of sharp discussions on matters related to economic aid, the Syrian Communist leader, Khaled Bagdash, disapproved aid to the Nasser government on the ground that “the possibility of a restoration of capitalism is not excluded in Egypt” (World Marxist Review, August 1964, pp. 50-58). Expressing similar opposition, Sawaja Sawaja, the Lebanese Communist leader, wrote : “Ideologically, Egyptian Arab socialism is a conglomeration of scientific and Utopian socialism, petty-bourgeois ideas, narrow nationalism, religious prejudices and subjective idealism” (World Marxist Review, September 1964, pp. 54-63).

16. Several questions may arise from these findings which invite further investigation : Was Sukarno aware that the bourgeoisie were gaining in relative strength? Did he build up the private sector of the national economy on purpose or did some of his associates connive behind his back? For an analysis of the relevant monetary policy data, see Janos Horvath, “A Note on Economic Trends in Indonesia,” Political Science Quarterly, December 1969, pp. 638-42.

17. Here follows a recent illustration : “Indonesia [postpones] repayment of the first installment in respect of its long-term debts to the USSR [equivalent to $785 million, which includes both economic and military aid] from April 1, 1969 to April 1, 1970… . With regard to projects financed with Soviet credits, the two Governments have agreed to continue with the establishment of the Faculty of Oceanography at Ambon and the highway project in Kalimantan but to postpone construction of the Tjilegon steel mill project and the Tjilatjap superphosphate project.” International Financial News Survey, May 31, 1969, pp. 182-83.

18. Letter from the Central Committee of the CPSU to the Central Committee of the Chinese Communist Party, Pravda, April 3, 1963.

19. Articles by K. Ostrovitianov and V. Tiagunenko in Mirovaia ekonomika i meshdunarodnye otnosheniia, 1964, no. 4, pp. 116-31, and no. 6, pp. 62-81.

20. Interview with Premier Khrushchev, Pravda, Dec. 22, 1963.

21. United, Nations, Yearbook of International Trade Statistics, 1966 (New York 1967), pp. 26, 824-34.Google Scholar

22. A Comparative Appraisal of Economic Aid, pp. 96-140.

23. Marshall I. Goldman, “A Balance Sheet of Soviet Foreign Aid,” Foreign Affairs, January 1965, p. 360.

24. Albert O. Hirschman, “The Stability of Neutralism : A Geometrical Note,” American Economic Review, March 1964, pp. 94-100.

25. Goldman, “A Balance Sheet of Soviet Foreign Aid,” p. 360.