Moscow’s alms race

Press, 24 September 1983, Page 16

Moscow’s alms race

From “The Economist,” London

Stung by criticism of their stinginess in helping the world’s poorer nations, the Russians recently produced some startling figures. They claimed to have spent $44 billion on foreign aid between 1976 and 1980, an average of 1 per cent of their gross national product, and 1.3 per cent in 1980. That would put them well above the United Nations aid target of 0.7 per cent of g.n.p. and well ahead of all western aid-givers. However, new British estimates suggest that these figures are bogus. A report by the British foreign office — “Soviet, East European, and Western Development Aid, 1976-82” — reckons that in 1976-80 the Russians spent no more than $8.3 billion on aid, an average of 0.19 per cent g.n.p.

It also calculates that 1982, 76 per cent of all Comecon nonmilitary aid went to six countries: Cuba, Mongolia and Vietnam, which are all members of Comecon, the Soviet-led economic group; Laos, which is officially described as “socialist”; and Kampuchea and Afghanistan, occupied by Vietnam and the Soviet Union respectively. By 1981, other developing countries were receiving so little in aid from Comecon that they were repaying more on outstanding loans than they were receiving in new aid. In 1982 the Soviet Union got back $lOB million more from these countries than it paid out in new aid.

Assistance to the six countries in the Soviet fold has expanded in recent years — at the expense of those outside.

Unlike official aid figures issued by the Organisation for Economic Co-operation and Development, the new British estimates take account of aid transfers made through preferential pricing deals as well as loans and grants.

By far the biggest beneficiary is Cuba, which sells its sugar and nickel to the rest of Comecon above world market prices. The catch is that Cuba must then spend its earnings on Soviet or east European i nports. However, Cuba and to a lesser extent Vietnam and Mongolia all benefit from cheap Soviet oil. In 1982 these special Comecon pricing arrangements amounted to subsidy of $424 million to Cuba, at least $4O million to Vietnam and $lO million to Mongolia. — Copyright, “The Economist,” London.