Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

14. National Intelligence Estimate⁰

NIE 100–3–58

August 5, 1958.

THE NATURE OF THE SINO-SOVIET BLOC ECONOMIC THREAT IN THE UNDERDEVELOPED AREAS

The Problem

To assess the Sino-Soviet Bloc aid and trade programs in the economically underdeveloped world, and to estimate their probable threat to the US.

Conclusions

1. The Sino-Soviet economic offensive continues to score successes for the Bloc at the expense of the West. Although involving economic benefit to the Bloc, it is conducted as an integral part of the Bloc’s cold war policy against the West. The underdeveloped countries, many of which have economic and political grievances against the West, are being offered an alternative source of arms and a wide range of economic relationships on attractive terms and, at the outset, with no apparent political conditions, ([less than 1 line of source text not declassified])

2. Although the economic program is of modest scope compared with the total volume of world trade and capital flow, it has strengthened the bargaining positions of certain of the underdeveloped countries vis-à-vis the West, given some of them a capability to defy the West, and helped to identify the Bloc with their nationalist aspirations. Generally satisfactory performance in conducting its aid and trade program has created for the Bloc an aura of respectability as a legitimate business partner. Economic dealings have substantially increased the ties of some countries with the Bloc, giving Bloc leaders economic and political levers for future use. ([less than 1 line of source text not declassified])

3. We believe that the Bloc leaders will intensify their economic offensive, whether or not they shift to a harder general line toward the major Western powers. Despite the requirements of the investment programs within the Bloc, economic capabilities will impose no serious limitation on the Bloc’s ability to continue, or even to double, its present trade, aid, and technical assistance program, ([less than 1 line of source text not declassified])

4. Bloc leaders will continue to direct their economic offensive at those Middle Eastern and Asian countries which now occupy their primary attention, but will probably also show increasing interest in Turkey, Greece, Latin America, and the emerging states of Africa. The Bloc may achieve dramatic economic inroads in certain of these countries, including some which have to date been closely tied to the West. ([less than 1 line of source text not declassified])

5. We believe, however, that the trade and aid program will not alone cause any state to align itself with the Bloc in the near future. We also believe that, with the passage of time, the Bloc economic drive may lose some of its initial glamour and effectiveness. The Bloc, as in the case of Yugoslavia, may not always fulfill its promises and it will not satisfy all the hopes which it has aroused. Some underdeveloped countries may in time become more wary and require more persuasion than they do now to accept Bloc offers of trade and aid. ([less than 1 line of source text not declassified])

6. The long-run threat posed by the Bloc economic offensive will nevertheless remain substantial. The economic offensive will operate in a context in which the steady growth of the economic, military, and scientific strength of the Bloc will make it a more formidable opponent of the West in the underdeveloped countries. Bloc trade, credits, and technical assistance will support the Bloc image of progress and power, and will provide opportunities for the propagation of Communist doctrine and the idea of rapid industrialization through the Soviet-type organization of society. In sum, unless effectively countered, these psychological and economic inroads will continue to erode the Western position in the underdeveloped world, ([less than 1 line of source text not declassified])

[Here follow the “Discussion” portion of the estimate (paragraphs 7–32), with sections headed “Introduction,” “The Bloc Program to Date,” “The Economic Offensive’s Accomplishments,” and “The Future of the Economic Offensive,” and seven tables.]

0. Source: Department of State, INR–NIE Files. Secret. National Intelligence Estimates (NIEs) were interdepartmental reports drafted by officers from agencies represented on the Intelligence Advisory Committee (IAC), coordinated by the Office of National Estimates of the Central Intelligence Agency (CIA), approved by the IAC, and circulated to the President, the National Security Council, and other appropriate officers of Cabinet level.

   A note on the cover sheet states that NIE 100–3–58 superseded NIE 100–57, “Sino-Soviet Foreign Economic Policies and Their Probable Effects in Underdeveloped Areas,” March 26, 1957. (Ibid.)

   Another note on the cover sheet reads as follows:

   “Submitted by the Director of Central Intelligence. The following intelligence organizations participated in the preparation of this estimate: The Central Intelligence Agency and the intelligence organizations of the Departments of State, the Army, the Navy, the Air Force, and The Joint Staff.

   “Concurred in by the Intelligence Advisory Committee on 5 August 1958. Concurring were The Director of Intelligence and Research, Department of State; the Assistant Chief of Staff, Intelligence, Department of the Army; the Director of Naval Intelligence; the Assistant Chief of Staff, Intelligence, USAF; and the Deputy Director for Intelligence, The Joint Staff. The Atomic Energy Commission Representative to the IAC and the Assistant Director, Federal Bureau of Investigation, abstained, the subject being outside of their jurisdiction.”