Excerpts from FIFTY YEARS OF TYRANNY: THE INTOLERABLE LEGACY OF THE NAZI-SOVIET AGREEMENTS OF AUGUST 1939

href=”index.jsp?section=papers&code=89-50″>(No. 89-50, 28
August 1989)

[In August 1989, on the occasion of
the fiftieth anniversary of the notorious
Hitler-Stalin Non-Aggression Pact, the
Center published a paper calling
attention to the accord that immediately
preceded and, in fact, made the
Non-Aggression Pact possible — the
Nazi-Soviet Trade Agreement of 1939.
Highlights of this paper, seem worth
repeating on the occasion of the new
German-Soviet understandings.]

• The Trade Agreement of 1939
  featured a number of momentous
  provisions, some of whose terms
  were kept secret, including the
  following:

• Germany granted
  the Soviet Union a
  merchandise credit of 200
  million Reichsmarks
  (worth billions of
  dollars in today’s
  terms), to be financed by
  the German
  Golddiskontbank.
  This loan would be 100%
  guaranteed by the German
  government and entail an
  interest rate of only 5
  percent (average 7 year
  maturity), of which (in
  accordance with a secret
  protocol) 1/2 percent was
  to be refunded to Soviet
  special accounts in
  Berlin.
• The credit was to be used
  to finance Soviet
  orders in Germany to
  include machinery,
  industrial installations
  and certain armaments.
• The credit was to be repaid
  by Soviet raw materials
  with delivery to start
  immediately upon
  signature. Such materials
  would include items vital
  to the German agenda of
  the time — namely,
  preparing its military
  for war with imports of
  phosphate, platinum,
  petroleum, cotton and
  feed grain.
• A senior German negotiator
  reported to Berlin his estimate
  that the agreement had an
  anticipated trade value on the
  order of 1 billion Reichsmarks
  and added that: “Apart from
  the economic import of the
  treaty, its significance lies in
  the fact that the negotiations
  also served to renew
  political contacts with
  Russia and that the credit
  agreement was considered by both
  sides as the first decisive
  step in the reshaping of
  political relations.”

• …It should be recognized in
  the West, and particularly in
  West Germany, that the technical
  structure of current Soviet-West
  German trade and financial
  relations is similar to the
  bilateral trade agreement of
  1939. Albeit that the sharp
  ideological difference between
  the Germans and the Soviets of
  the earlier era was one of
  fascism versus communism whereas
  it is now one of democracy versus
  Gorbachev’s version of Marx and
  Lenin’s teachings, the notion
  persists that trade and credits
  between the two countries can
  overcome such political
  differences.

• Now, as then, manufactured goods,
  technology and generous credit
  terms are basically bartered for
  Soviet raw materials, notably
  energy resources. Similarly, many
  important details of current
  German-Soviet trade and financial
  flows are kept secret, just as
  was done in 1939. Enough is
  known, however, to raise serious
  concerns that West German trade
  and credit is primarily directed
  toward bailing out the Soviet
  Union’s backward economy, rather
  than toward encouraging — to say
  nothing of being in any way tied
  to — systemic economic and
  political reforms in the USSR.

* * *

• It is time…that the secret aspects of
  the German-Soviet economic and financial
  relationship are replaced by full
  transparency and data disclosure. The
  Western democratic allies require a true
  sense of the dimensions and terms of this
  relationship. A new, more open approach
  by Bonn on these matters would greatly
  advance prospects for the coordination
  and constructive use of Allied economic
  and financial leverage needed to bring
  about the true transformation of the
  Soviet system to one embracing democracy
  and free markets and committed to peace.