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ACTION EUR-25
INFO OCT-01 NEA-10 ISO-00 CIAE-00 DODE-00 PM-07 H-03
INR-10 L-03 NSAE-00 NSC-07 PA-04 RSC-01 PRS-01 SPC-03
SS-20 USIA-15 AID-20 COME-00 EB-11 FRB-02 TRSE-00
XMB-07 OPIC-12 CIEP-02 LAB-06 SIL-01 OMB-01 AGR-20
DRC-01 /193 W
--------------------- 052663
R 220936Z MAR 74
FM AMEMBASSY BUDAPEST
TO SECSTATE WASHDC 1026
INFO AMEMBASSY AMMAN
AMEMBASSY BEIRUT
AMEMBASSY CAIRO
AMEMBASSY TEL AVIV
LIMITED OFFICIAL USE BUDAPEST 0676
E.O. 11652: N/A
TAGS: EAID, HU, SY
SUBJ: HUNGARIAN CREDITS TO SYRIA
1. SYRIAN MINISTER FOR PLANNING (MUSTAFA HALLAJE) WHO
ARRIVED IN BUDAPEST MARCH 18 ON OFFICIAL VISIT MADE
STATEMENT MARCH 20 TO HUNGARIAN ECONOMIC DAILY
VILAGGAZDASAG RE SIGNING OF "CERTAIN AGREEMENTS PLANNED
THIS WEEK". UNDER ONE OF THESE AGREEMENTS HUNGARY WILL
PROVIDE CREDIT OF $25M TO ASSIST IN REALIZATION OF
SYRIA'S THIRD FIVE YEAR PLAN, DELAYED BY LAST YEAR'S WAR.
2. ACCORDING TO HALLAJE, SYRIA INTENDS TO GO FORWARD
WITH PLAN AT ORIGINAL DEVELOPMENT RATE. TO MAKE UP FOR
LAST YEAR'S DELAY SYRIAN GOVERNMENT, HE SAID, HAS DECIDED
TO CARRY OUT "BIGGEST EVER INVESTMENTS IN HISTORY OF
COUNTRY", ADDING THAT SYRIA "HIGHLY APPRECIATES HUNGARY'S
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ASSISTANCE...AND DEPENDS ON THIS AID". SYRIAN EXPERTS
WHO ACCOMPANIED HALLAJE TO BUDAPEST ARE NEGOTIATING WITH
HUNGARIAN COMPANIES, ACCORDING TO VILAGGAZDASAG, TO
PURCHASE ENGINEERING EQUIPMENT, INCLUDING AN INCANDESCENT
LAMP FACTORY, AS WELL AS FARM MACHINERY AND DISTILLERIES.
3. SALE OF ENGINEERING EQUIPMENT TO SYRIA NOTHING
UNUSUAL IN THAT FOR YEARS NOW SUCH EQUIPMENT HAS BEEN
TRADITIONAL HUNGARIAN EXPORTS TO LDC'S. PURCHASE OF
INCANDESCENT LAMP FACTORY UNDOUBTEDLY INVOLVES TUNGSRAM
FIRM WHICH HAS OVER 30 WHOLLY OR PARTIALLY-OWNED FACTORIES OR
SUBSIDIARIES ABROAD. SEVERAL OTHER ASPECTS OF THIS TRANSACTION
WORTHY OF NOTE. HUNGARY IS DISCONTINUING MANUFACTURE OF
AGRICULTURAL EQUIPMENT AND IS CLOSING DOWN
FACTORIES. THUS, SALE OF FARM MACHINERY TO SYRIA APPEARS
TO BE A CLOSE-OUT, PROBABLY INVOLVING INFERIOR EQUIPMENT.
FROM VILAGGAZDASAG'S TREATMENT OF
HALLAJE'S STATEMENT, IT APPEARS THAT THIS IS A HARD
CURRENCY LOAN ADVANTAGEOUS CLEARLY TO HUNGARIANS.
DOLLARS DO NOT LEAVE HUNGARY, YET HUNGARY RECEIVES
DOLLARS IN PAYMENT. THERE IS NO INDICATION IN
HALLAJE'S STATEMENT RE INTEREST RATE OR DURATION OF
PAYMENT PERIOD.
4. HALLAJE'S STATEMENT THAT SYRIA HAS DECIDED TO CARRY
OUT LARGEST INVESTMENT IN ITS HISTORY THIS YEAR TO
COMPENSATE FOR SETBACK SUFFERED BY OUTBREAK OF WAR
LAST FALL COULD BE INTERPRETED AS MEANING THAT HIS
GOVERNMENT DOES NOT EXPECT INCREASE IN HOSTILITIES
WITH ISRAEL THIS YEAR.
PEDERSEN
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