The Sharp Edge of Soviet Foreign Aid
HERMAN, LEON M.
An analysis of The Sharp Edge of Soviet Foreign Aid By Leon M. Herman THE SOVIET UNION has been dispensing economic aid to countries outside the Communist camp for the past six years. Its program...
...3. That true industrialization can be attained only by following the stormy, power-oriented method employed by Stalin in the Soviet Union...
...This will happen "inevitably...
...The tools for increasing productivity are well known...
...In general, the Soviet approach shows more awareness of the psychological impact of the technique of giving...
...Ceylon, Yemen, and Guinea...
...The Soviet Union has also used its aid program to deliver oil tankers to Indonesia and to build gasoline storage tanks in Yemen and Afghanistan...
...2. That, at best, the West intends to help them develop only within the familiar groove of "cheese-cloth industrialization," i.e., self-sufficiency in textiles and other trivial consumer products...
...Among such targets, Soviet officialdom has found a highly convenient culprit in the form of the international oil companies...
...They represent a bete noire of the first order because a campaign against them makes so few enemies and helps to fortify the Soviet pose as the undaunted fighter for justice, the "selfless, true friend of the new independent states of the East...
...As the successful heirs of a revolutionary regime, the Soviet rulers are more disposed to believe in the reality of the forces that can be unleashed through the promotion of economic conflict, through the sustained fanning of hatred against a "class enemy," real or imagined...
...By 1958, however, the Soviet economic campaign outside the Communist bloc was back in full swing: New credit arrangements between USSR and the developing nations approached the billion dollar mark...
...They are not impressed by the sight of an expanding world economy...
...The differences in technique have their effect, to be sure, an effect gained largely through watching from the sidelines for several years before taking the plunge in economic assistance...
...In order to qualify for the role of political bellwether, the Soviet Union must, of course, be able to demonstrate that it...
...This applies, in the first place, to economic support extended by the Communist party to the workers in its own country...
...But Soviet economic aid outside the bloc looks suspiciously like an act of political speculation...
...Soviet-supported projects...
...the keepers of the purse were busy mending economic fences in Eastern Europe...
...In several countries (Afghanistan, India...
...India...
...The only way to resolve the class struggle, as they see it, is to explode every nation, by means of a civil war, into a better future...
...In their view, only hopeless reformists can believe that the struggle between the 'haves" and the "have-nots" can be resolved by the peaceful accommodation of existing individual national economic interests...
...Economic evolution has proven a more dependable means for raising income levels and personal well-being on a mass scale than the method of total social "over-turn" favored by Moscow...
...PRACTICAL ACTS of economic assistance, however, are not an end in themselves...
...According to prevailing theory, the class struggle is now ready to be turned into a global contest of strength...
...Ethiopia and Guinea), reaching a figure of some $200 million...
...The moral of this experience should not be wasted...
...This is strictly a "tied" loan, in the sense that the credit must be spent in the USSR for Soviet equipment and technical services...
...Syria and Egypt) the Soviet Lnion is now sponsoring large-scale projects for the exploration of oil and gas deposits...
...states the case as follows: "The success of Socialism in the USSR marked a new, radical shift in the correlation of class forces on a world scale in favor of Socialism, to the detriment of capitalism...
...a weapon for solidifying the toilers of the whole world against world reaction...
...on terms that are conspicuously favorable...
...4. That the nations of the West are only fair-weather friends, who will one day turn their backs on them altogether...
...In slogan form, this element in the official strategy has been expressed as follows: "Everything that injures the monopolies alters the relationship of forces in favor of socialism...
...they can and must be made available to the nations that are now earnestly seeking economic development...
...Soviet technicians are engaged in building large, modern oil refineries...
...In the long run, however, Soviet prophecies with respect to the newly liberated peoples may prove no more accurate than the original Communist forecasts about the destiny of Western Europe...
...Egypt, Yemen...
...and British oil monopolies make monstrous profits—$1.3 billion a year—from oil production...
...During his recent visit to Mexico, for example...
...Academician A. A. Arzumanyan, the ex-colonies cannot solve their problems of industrialization "along ordinary capitalist lines...
...Typically, the recipient nation is granted a line of credit for a stated amount of rubles...
...At present, world capitalism is officially labelled as passing through the dismal phase of "the disintegration of the colonial system...
...Accordingly, there is something of a public record of performance, accompanied by official comment on the record, against which the broad objectives of the Soviet Government in this sphere of action may be assessed...
...If they are given sincere and sustained assistance by the economically more advanced nations...
...Five of these are in Asia (Afghanistan...
...12 electric power stations, 11 machinery plants, nine steel mills, seven chemical plants, and six oil refineries...
...The aid program assumes the character of a practical base from which Soviet policy may take advantage of any future opportunities...
...The total amount of capital committed by Moscow, i.e., the sum of all credits due to be extended over the duration of the aid program, now measures some $2.2 billion...
...as a result of the present trend in capitalist technology...
...The growing power of the Soviet camp, as Fedinin puts it, is having the effect of "unleashing the initiative of the colonial people in the struggle against imperialism, of inspiring in them confidence in the victorious outcome of this struggle, making it more stubborn and more successful...
...The four lesser client-nations (below $100 million) are Burma...
...Above all, there must be no sliding backward...
...The first Soviet foreign aid commitment of $11 million came cautiously in 1954, to Afghanistan...
...The two other recipients of military aid are Indonesia and Afghanistan...
...At present, the number of nations to whom the Soviet Union is committed, by formal agreement, to extend economic aid, stands at 12...
...In the opinion of the dean of Soviet experts on "capitalist" imperialism...
...New arrangements for assistance continued in 1959 (with Iraq...
...They must, first of all, persuade them to recognize the "have" nations as the true enemies of their future economic progress...
...has the technical resources to support the urge of the newly established nations to modernize their economic production...
...Thus, the time is ripe for a course of effective action designed to speed the collapse of capitalism as a world system...
...The views expressed here, of course, are his own...
...It goes without saying that the USSR proceeds on very much the same basic premise when it contributes to the economic growth of the countries within the Soviet bloc...
...The triumph of Communist rule over an area containing one-third of the world's population has, as the Kremlin sees it, ipso facto increased enormously the "magnetic force of Socialism...
...He could think of no more fitting topic for promoting selective friendship among nations than the "sins of the oil monopolies...
...But what gives the present Soviet overture toward the less developed nations the character of a campaign against the stability of the non-Communist world is the grand strategy upon which it is based...
...First Deputy Premier Anastas Mikoyan felt it his duty to dispel any illusions his Mexican hosts may have harbored about their neighbor to the north...
...Something of a peak was reached in 1956, following the ceremonial tour of Khrushchev and the then Premier Nikolai Bulganin through Asia...
...During the past nine years, these Arab countries lost over $6.5 billion worth of oil profits...
...in On Economic Aid to Underdeveloped Countries (Moscow, 1957), is as follows: "They [the imperialists] are calling upon the less developed nations to give up for the present their plans for industrialization and at first to develop agriculture, then light industry, and only in the far future—the basic branches of production...
...The Soviet Union, furthermore, attempts to soothe the sting of indebtedness by representing the repayment process as a new opportunity for the client country to increase its exports to the Soviet market...
...four in the Middle East (Syria...
...Six of the 12 aided nations have received military aid...
...Significantly, the four aided nations in the Middle East group received their arms credit ahead of their economic development credits...
...It must show that it can provide a flow of industrial equipment on favorable long-term credit, send qualified technicians to help build modern plants and facilities, and train native specialists...
...The Arab countries may be too far away to touch the heart of the average Mexican...
...Actual drawing against this credit usually takes place over a number of years, ranging from four to eight, while repayment is staggered over a larger span of time, normally beginning one year and ending 12 years after the arrival of the equipment...
...Burma, Indonesia, Ceylon...
...But a well-aimed barb against the "oil magnates" to the north should help advertise Soviet sympathy for the weaker nation...
...Its program is designed to enhance the position and prestige of the creditor-nation...
...The capitalist system, it is reasoned, was thrown into a state of "general crisis" by the outbreak of the October Revolution in Russia...
...Considerable momentum was picked up in 1955, with the undertaking to build a steel mill in India and to help modernize Egypt's armed forces...
...While the process of disintegration of capitalist empires is underway, Soviet policy must be aimed, in Moscow's words, at preventing the "imperialist sharks" from involving the newly emergent nations into a new web of colonial exploitation...
...There is so much "political knowledge" that the Soviet leaders must bring to the awakening people of Asia and Africa...
...1957...
...This is equally true in the present international setting, when the former colonial peoples must be awakened, through economic support, to the worldwide political struggle in which they are presumably involved...
...One Soviet authority, V. K. Fedinin, in his The Collapse of the Colonial System of Imperialism (Moscow...
...Lenin saw no other reason for taking part in the economic struggle against the bourgeoisie ("the enemy class") except in order "to bring political knowledge to the workers...
...Even in the Western hemisphere the Soviet Union has extended a $100-million credit to Argentina for oil equipment, and has offered a similar arrangement to the state-owned oil companies of Brazil and Mexico...
...This compares with a rate ranging between 3.5 to 6 per cent at present on the world capital market...
...over one-third of all committed funds, in fact, represent military supplies furnished on credit...
...They must demonstrate, in particular, a number of concrete, educational propositions: 1. That the nations of the West are less interested in general economic development than in maintaining their own monopoly position as exporters of machinery to the less developed nations...
...As far as public discussions go, Soviet policy-makers show no fear that by providing support to the onetime colonial nations, within their present political institutions, they may be strengthening "capitalist" forces inside these countries...
...As a rule, Soviet assistance takes the form of a loan extended LEON M. HERMAN, who studies current, Soviet economic developments as a Senior Specialist in the: Legislative Reference Service of the Library of Congress, was formerly chief of the USSR section of the Commerce Department...
...Of these, four recipients—namely Egypt, Syria, India and Indonesia— have each received a commitment of over 300 million dollars...
...Soviet-sponsored class warfare can in time be made equally irrelevant on the international scene...
...This strategy can best be perceived against the background of the Soviet "theory" on the nature of the class forces at work in the world today...
...He came amply supplied with his own calculations...
...As experienced political manipulators, the Soviet rulers know, moreover, that this holy war against the "monopolies" must be given concrete form as often as possible...
...Through this device they are counting on dooming the less developed nations to economic dependence and backwardness for many years...
...One more built-in attraction is that repayment can be made in the form of standard domestic export goods, at prices to be negotiated on a year-by-year basis as each loan payment falls due...
...It has also assiduously used all available forums—including the United Nations—to promote its favorite remedy in this sphere—the nationalization of the oil industry in countries seeking economic development...
...It is no secret that the Soviet leaders are convinced they alone understand the purpose of the historical process...
...One distinctive feature of the Soviet aid program is the absence of outright grants to needy nations...
...They must be taught that their full freedom from exploitation will not be secure until they break their economic ties with the West, until they "put an end to the present unequal 'division of labor,' imposed upon them by Western capitalism...
...This point by V. V. Rymalov...
...As officially reported, Soviet economic aid is supporting some 200 projects...
...It is not surprising, therefore, that a major element in the Soviet foreign aid effort is concerned with fostering "independence" against the oil companies...
...The distribution of development projects by individual nations has been recently summarized in the September 1959 issue of Vneshnaia Torgovlia (Foreign Trade) as follows: Industrial Enterprises Other Installations Afghanistan 7 19 India 20 2 Burma — 11 Indonesia 4 3 UAR 39 54 Ceylon 8 6 Iraq 16 9 Total 94 104 A NUMBER of unique practices set the Soviet aid program apart from the pattern of economic support followed by the West...
...When a Western nation extends help to a less developed country, such an act is generally understood as a token of implicit confidence in the political methods whereby the country is attempting to achieve economic health or maintain its national integrity...
...In six Arab countries," he reported, "U.S...
...The new nations must be taught the meaning of "real" independence by their "true" friends in the "anti-imperialist" camp...
...The next year the pace was visibly slackened...
...The distribution by country, of course, varies a good deal: Eight of the 12 countries have received a credit commitment of 100 million dollars or more for development and other national ends...
...Properly managed Communist economic aid programs, therefore, must have the effect of further undermining the position of the "monopolies" vis-a-vis the less developed nations...
...Now that Soviet power has extended its base of operations from a single country to a whole "system of Socialist states," the chances for influencing the outcome of the world-wide class struggle are more favorable than ever...
...The doctrine of the class struggle as a vehicle by which Communist parties could propel themselves to power in the West has been rendered irrelevant by the fact that gradual economic improvement, within an atmosphere of open political accommodation of group interests, has worked...
...Outside of the industrial group, the program covers a wide variety of undertakings: irrigation projects, railroads, highways, ports, hospitals, sports palaces and research institutes...
...The Soviet Union became a potent political and economic force...
...According to tested Soviet doctrine, popular economic action becomes purposeful only when used as a means of "awakening the political consciousness" of the people being aided...
...Most important among these are: 13 mining facilities...
...As a rule, too, Soviet aid offers lake the more prestigious form of loans rather than grants...
...for example, are more oriented towards heavy industry, serving as a symbol of modernity and a promise of further, self-generated growth...
...In India, Syria and Egypt...
...A little less than half of these are industrial enterprises under construction, with the accent on heavy industry...
...Such a likelihood seems to be ruled out as unhistorical...
...This is not counting profits from refining, transport and resale...
...It should also be noted that supplying arms plays an important part in the Soviet assistance program...
...Since then, it has been losing one position after another, largely as a result of the expanding international influence of the Soviet Union...
...Iraq) : two in Africa (Guinea and Ethiopia) ; and one in the Western Hemisphere (Argentina...
...Because of the increasing role of synthetic materials, says the authoritative Soviet Institute of World Economics, the Western nations "cannot be counted as dependable markets for the raw materials of Asia and Africa...
...The accounts are kept in "foreign trade rubles...
...The dramatically low rate of interest on such loans, 2.5 per cent, is another distinctive feature of the Soviet credit package...
...a nominal unit equal to one-fourth of a dollar in purchasing power at world market prices...
...In addition, Soviet dignitaries personally carry the crusade against the oil companies wherever they go, as part of their globe-trotting campaign in behalf of "peace and friendship...
...What is more, they alone know by what force history will reach its ultimate goal, namely through the intensification of the class struggle on a world-wide scale and the defeat of the "doomed" class...
Vol. 43 • February 1960 • No. 8
