ECONOMIC - SOVIET PROPERTY IN GERMANY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600150191-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 22, 2016
• Document Release Date: June 15, 2011
• Sequence Number: 191
• Publication Date: June 15, 1954
• Content Type: REPORT

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US O ICIALS ONLY CLASSIFICATION S-E-C-R-E-T
CENTRAL INTELLIGENCE AGENCY
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NO. OF PAGES
THIS IS UNEVALUATED INFORMATION
This report deals with the 33 SAGS (Soviet corporations) re-
turned to the GDIt on 1 January 1954 under the general agreement
co.icluded in Moscow on 23 August 1953?
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 States of SAGS cc 15 SaptevAor 19 3
(1)
PLxad
Cre"ts
Caplta1
Awets
Limed
Crpital,
Value of
Prcdnct1c i
Profits
Md
low
.y
_
akin
(, nian
(lmulioA
tJiil7 son
%PU1iae~
fiber of
(itilliaa
(ifilliaa
All SAQs
2,030.9
181.3
5,133.6
1,007.5
200,Ow
910.8
341.6
J. V. eta11n. ctric*P.
eparl, .
4.9
163.7
14.3
7,500
11.0
6.0
al.~.Ba-llu.llai fitter-
Ito
Drum, Esrlia-
116
Llehte.berg
-:18.8
1.11
63.0
13.5
3,100
10.0
. 5.8
14
Ala COMM
168.6
11.3
167.8
51.0
8,100
78.0
21,0
its ft&vgmatim
Veah.
96.o
7.1
219.2
50.3
k,800
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hwerabelft works
Hnm CMrical Work.,
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 m
3
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C p2bwv:7
t abw el~baric~t 7 e
WAN 262..0 .15.0 502,6 9.o 26,o0 100.0 43.0
P* tits at?"= yarts 34.0 k.4 ]22.0 19.3 5, 2F~.0 S,0
V. - for
f6i16~ !lo~et~ 5.2 2.3 34.0 5.k 1,k00 . 3.0 2.5
gawg4bIts
>td4s . 7.3 0.7 415.0 0.4 2,100 4.0 1.8
,if
.0 -1 ardTmmt-
4.4 0.7 33.5 4.7 2s100 5.6 3.0
3.8 0.7 25.5 1:7 . 2,300 5.6 3.8
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which is probably 50-60 percent higher. The Soviets deliberately keep the fig-
These figures were used only for statistical purposes. Moreover, the figures
assets of these 33 former SAfs will now be entered ra the balance sheets and
whether they will henceforth have to pay income tax and business tax.0
no taxes were paid on it. It has not yet been decided whether the fixed capit.l
The moat difficult point in the negotiations between the GDR and the USSR
given to the SA:s by the State Bank %sbank) of the USSR through the GRB (Guar-
antee and Credit Bank), Berlin, at 4 percent interest.(l) 'the GXB is really
the Berlin branch of the State Bank of the USSR.(2) lio formal papers were
signed in the transaction.
inVestre:rts wen originally paid for by the GDR. It aid 500 million Deutsche
markz for such investments in 1951 alone.
The liquid capital shown in the above table is Soviet capital. It was
The production figures in the table represent gross production in 1952 at
actual invoice values.
The profit figures in the 'table represent average annual gross prof its,
Which amount to about 20 percent. (In contrast, profits o_? the PEBs (people-
ownod enterprises) are not allowed to exceed 6 percent.) The profits were paid
to the Soviet main sdLinistration 5robebly to USIG (Administration of Soviet
Property ;n Germanyv. The Soviets thus received a completely unrealistic pro-
?it.
The old long-term credit shown in the table was granted by the GIB at 4-5
percent interest Lon an unspecified. dateJ. .ill. InstallaL'.one and. production
materials of the SAGE were pledgel as security. In some cases, this loan was
not sufficient to guarantee uninterrupted prod , because the normal require-
ments for operating funds were underestimated
over [not indicated in the table]. These credits have no time limit and they
the cojgaratively meal SAG "7 Oktober" Machine-Building E terprise*
received a credit of 3.7 million Deutsche marks L5.8 million, according to the
ethe
table7. In general, the credits?awount to about 50 percent of the annual turn-
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L3?n unspecified way? control their financial affair~_~ shows that the exist-
may b canceled on 6 months' notice. However, this cancellation period is mean
ing7 ss; for the S+AGs had to give prcadasory notes with sp 3-day call- period as
collateral for the loans. These new long-tem credits are secured by the entire.
capital assets of each plant, as well as by all stockpiles of products and raw
materials on hand at each. The GKB will retain possession of the aceounte re-
ceivabla of these 33 Me after their return to !, ownership arA will otherwise
Tho fallowing clebts (in million Deutsche marks) of tth' 33 SAG!
1954.
y
Soviet directors will remain in the plants only fora short time during the tran-
sition period. However, even Though they are called "German" enterprises, these
33 SAGS will continue to produce exclusively for the SovietR, and for practical
purposes will remain in Soviet possession. The proiuction of these SAGS, which
was fozneriy shipped to the USSR and, the Soviet Bloc as reparations, will now be
exported to these countries through the DIA (Intra-Gcrini and Foreign Trade r"i.ter-
prise)
Reparations shipments to the USSR will not cease altogether. The ag;'cem t
on the return of the 33 SAGS to GDR ownership provides that backlogs in repara-
tions deliveries, which were originally caused by difficulties in the supply of
rs,* materials or by a lack of production capacity, will have to be fulfilled
completely, even after 1 Januoxy 1954. All backlogs back to 1951 are inciud d
in this provision, and no pcjnent will be made by the LU.SR for these deliveries.
As a result, the T. SR has an opportunity to obscure for some time the real value
of commodities which will be shipped from the GDR to the USSR. Furthermore, it
can add other orders to this backlog which were not originally a part of it.. In
the second half of 1953, the Warnow Shipyard, Wsrnemuende, received a reparations
order for a floating power station, which it cannot deliver before the end of
ination and .production program of the SAGS after their return to GDR atimer, ahi,i,
on 1 January 1954. At most, the terns "reparations 5sed fur piny of their 3k1p-
1Wnts7 will be replaced by the term "exports.=
The return of the 33 SAGS to GDR ownership is a cunni;-g fraud. The Haas
be cropped and there will be sove organizational changes. The
SAG will merel
The experts, which are replacing reparations, will henceforth be superei.sed
by an Office of Exports to the U3SR, which is the name given to the former Office
of the Reparations in November 1953. This office is entirely independent from
ministerial superviesion. Lother reports state that the Office of Exports to the
USSR wi under the authority of the Ninist of Foreign and Intra-German
ad.. .
It ocated in the former Air Ministry in
Berlin, Leipztger Strasse. The former Soviet director-generals of these 33 enter-
pi'ises have not been recalled. They remain at their plants, where they now &A
as acceptance officers for these exports to the USSR. Aa.heretofore, they will
onsible for the delivery on schedule of reparations or exp3rt. commodities.
rea
be
p
.
They will alsc continue to be responsible for the plants' continued ,_,oduction
in accordance with their production obligations. It will be essentially up to
Old long-tens credits
New long-term credits
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k eZore 1 'Jaautu"y LW-, a.
it 1938 prices, and also paid these prices for GDR exports. The ifferecasc e
tween this amount and the current invoice value of the products .o the cC
-r ..- __.,_ ...,-ar r,,. the MR Office of Reparations. Only
Subsidy payments formerly, made for reparat on. p
for the exports to the USSR-(2) The proceeds in clearing currency to the plcats'
from these exports will perhaps suffice to pay the wages and salaries of the work-
ers and employees engaged in producing the commodities. But It Is doubtful if
the Ministry of Fin see will be able to maXe. sufflci< nt fur-.31 available to i he;,a
enterprises from the proceeds in clearing currency to pay for the materials used
cme from other budget
a few of the enterprises exra invoice velar
volved. In 1953, the subsidies amounted to 73 percent cevv3
%ne subsidies amounted to 75-30 Ftrofofnt the of the
value. In 1952, these subsidies amounted to more than NY) million Deutsche riarks.
roductiOn will henceforth be made
in the goads. Such funds will probably n a v e ' ,
In contrast to the 33 SAGS, which are to be --turned to GDR ownership on
1 dr,?'uusry 1954, the 66 SA3s which were returned to the GDR in 1(,52 here actu-
ally become GDR-owned. Howev:r, these enterprises had completely worn-out
plants. The wear was such ti'det, after their return to am ownership, the plants
fulfilled their production plans on the average by only 50 percent. Moreover,
the GDR contracted to pay for the capital assets of these 66 SAiGs to the USSR
over,'a period of 7 years. The total amount which the GDR was Coins to Pay
amounted to 800 million Deutsche marks. Hovevir, Zthe balance of this debt
has now been canceled.
Brikett, Kabel, and Marten
L197J production o1 pus e - .? --, - --
higher xhsn In 1953 -- was ea ed b U51G rlin-Keis:ensee in early cctc-
USIG moved rom Eerlin-Weissensee to Berl n-?Kar s ors
past 1953. Accordi to the moat recent aruiouncements, this plan is to be com-
pletcly :ulfilled.
In sedition to the credits granted to the 33 SAGO on and after 10 September
' there. are tho following indications of continued Soviet control of these.
entsscgrl.sas t
1, A new-type commercial enterprise is to be founded, which will handle
their future exports. This con erci'l enterprise is to administer these enter-
prises as a trust in the Soviet interest.
2. New supervisory organs will control these enterprises to see that they
observe the contractual egreem_nts dictated by the
3. These 3-- -fcrmer SAC& will .got be srbcrdiratea directly to the compe-
tent sDR industrial ministries. Instead, they will be controlled by spl
new state secretariats which are ';o be cre3tl d within the cumpetert
The seven former enterprises of the SAG A10 and the six former enterprises of
the SAG Transmaach will be administered by a sY ciaalMsta state
of Heavy Machine Building 5-zw part
in&/. At the same time, the following eighteS groups wil be dissolved-AM,
Transmssch, Mineraiduenger (mineral
s T
will like~ttee be no change in the me
allocation of smteriels, which the S.AGs have enjoyed her+etofore.(2) The planned
y
cial plan 'or l951+% were drawn up iu the same
f production, or in the preferential
thod
955 v----. --
Preparatory planning o
plants as in previous years. The economic plan, tk~e play:t'c plan, and the fi: an
as the piers for 1953? There
wa
1
i tems ? w~
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 The director-generals of the 33 SAGO were suddenly called to an extraa-
urdina ry conference at Karleborst on 2' and 21 Septe a 1953. 1~ purpose
of the meeting is not indicated.
Lyn connection with the various swans of exacting values from the (x'DR,
the following should also be noted In September 1953, several old paintings
of great value were stored in the LISZG building at Kerlshorst. An "art expert"
estianted their value at about 200,000 Deutsche smirks. But the actual value
of these paintings by old masters is said to be about 2 million Deutsche marks
These naintingss are to be shipped to the t' resusrsably to the USSR