Soviet Union-Composition of Trade

Not including arms sales, machinery accounted for 20 percent of total sales to the Third World in 1985. Soviet exports of machinery took up an even higher relative share of total sales to Algeria, Iran, Nigeria, Pakistan, the People's Democratic Republic of Yemen (South Yemen), and Turkey. From 1980 through 1984, fuel, mostly oil, made up approximately 33 percent of overall Soviet exports to the Third World, including 50 percent of its exports to Asia and 60 to 70 percent of its exports to Latin America. Since 1985 greater competition on the world market resulting from falling world oil prices and rising Soviet extraction costs has prompted the Soviet Union to try to replace its export of oil with manufactured goods.

The Soviet Union has been the largest arms exporter to the Third World for a number of years. Major arms customers were concentrated in the belt of countries that stretches from North Africa to India, close to the Soviet Union's southern border. Some 72 percent of Soviet weapons exports went to Algeria, India, Iraq, Libya, and Syria. Other important customers included Afghanistan, Angola, Ethiopia, South Yemen, and the Yemen Arab Republic (North Yemen). The Soviet Union lost arms customers in the 1980s, however, when Brazil and Egypt began to expand their arms sales to the Third World. India, which had experienced improvements in its hardcurrency balance in the 1980s, also started to buy arms from other suppliers. In an effort to retain its share of Indian arms customers, the Soviet Union continued to offer India its most sophisticated weapons at even more attractive rates.

The Soviet Union has long been an importer of Third World agricultural products. These imports increased dramatically after 1980 because of poor Soviet harvests from 1979 into the early 1980s and the United States grain embargo against the Soviet Union in 1980 and 1981. From 1980 to 1985, food and agricultural goods, half of them grain, made up 50 percent of Soviet imports from the Third World. In the first nine months of 1986, the decrease in grain purchases accounted for most of the 22 percent drop in imports from the Third World.

Africa and Latin America supplied most of the food imports other than grain. Throughout the 1980s, food imports steadily rose, but imports from individual countries fluctuated. Because of these fluctuations, the Soviet Union was often considered an unstable trade partner compared with Western customers.

Because the Soviet Union was a major producer and exporter of most of the world's minerals, its import requirements for many other commodities (nonferrous metals, in particular) were sporadic. Nonetheless, the Soviet Union was a stable importer of some minerals, particularly bauxite and phosphate rock. The Soviet Union imported up to 50 percent of its bauxite from Guinea, Guyana, India, Indonesia, and Jamaica. Phosphate rock was abundant in the Soviet Union, but because extraction costs were high most of this mineral was imported from Morocco and Syria.

A decline in Soviet imports of manufactured goods in the 1970s led Third World countries to pressure the Soviet Union to increase the import of these goods in the 1980s. In 1982 the Soviet demand for Third World manufactures began to rise. By 1984 manufactured goods, including manufactured consumer goods, made up 25 percent of Soviet imports from the Third World.

Beginning in 1973, in an effort to earn hard currency, the Soviet Union began to import oil from Third World countries for reexport to Western industrialized countries. This activity slowed from 1980 to 1982, recovered in 1983 through 1985, and continued to increase in 1986. Late that year, the Soviet Union signed an agreement with the Organization of Petroleum Exporting Countries (OPEC) that restricted the amount of oil it could buy for reexport. By 1988 this agreement had not cut total Soviet oil receipts, however, because oil was paid to the Soviet Union as compensation in arms sales.

Data as of May 1989