SOVIET TRADE PRACTICES AND ACTIVITIES HARMFUL TO SATELLITE ECONOMY AND EAST-WEST TRADE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A000900170003-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 27, 2016
• Document Release Date: July 30, 2013
• Sequence Number: 3
• Publication Date: May 2, 1950
• Content Type: MEMO

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CONFIDENTIAL kw)
CENTRAL INTELLIGENCE AGENCY
INTELLIGENCE REMHANDUR HO. 286 2 May 1950
34
SUBJECT: -Soviet Trade Practices and Activities Harmful to Satellite
Economy and East-West Trade '
Foreword
The paranount economic objective of the USSR is the enlargement of
its economic potential for war. Within its own borders the Soviet Union
has furthered this objective by concentrating on heavy industry and mili-
tary production and by establishing certain enterprises in strategic
areas. In the Satellite countries and the Soviet mcnes of Gernmny and
Austria, the USSR pursues the sane objective by exercising strict control
over the Satellite economies and closely Coordinating the Satellite econ-
omies with each other and with that of the USSR.
Tho USSR has uSed a number of devices to gain control o'er the Sat-
ellite economies. In addition to the rights gained through peace treaties,
ths USSR has used its power to obtain vast concessions from the Satellites
in bilateral, mutual assistance, and economic collaboration pacts, most of
them with secret protocols. Soviet control of Satellite internal ?canonic
activity has been achieved through local Communist parties. Tho Council
of Econonic Mutual Assistance, established in January of 1949, provided
the formal vehicle for coordinating the Satellite economies, as well as a
more effective mechanism for eventual economic integration. Thus the
Soviet Goverment directly, or through the puppet Communist regimes, has
broad control of the major aspects of economic planning, production, and .
distribution and in exercising this control has shown little or no regard
for the national needs of the individual Satellite states.
Ample evidence exists of Soviet efforts to dominate the Satellite
economies and to impose limitations on East-West trade. The following
four sections compile data, all rated as reliable, which illustrate Soviet
techniques and describe certain specific instances of Soviet exploitation
and trade practices. The sections are divided as follows:
I. Soviet-Satellite Economic Relations.
II. Soviet Exploitation of Satellites Through Joint Companies,
III. Soviet Directed Economic Sanctions Against Yugoslavia.
IV. Soviet Imposed Limitations an East-West Trade.
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X. 222121-Satellite Economic Rigalasalion
Satellite occgumnia developmant and foreign trade have been forcefully
directed tovard the Rag% i.o.s the:SeViet Union. This thoroughgoing rico-
adSustment is detrimental to the ecanomies of the Soviet-dm-ideated states
of Eastern Europa ad?onstplified by the following instances:
1. Bulgaria canont sell any of its production) including tobacco, .
to the West without SoViet permission. Bulgaria ban lost much of its pro.,
fitablo market for its principal ozportlproduct, and most of the tobacco
taken over by the USSRs by moans of unfavorable tarter practices, is resold at
high profit. .
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? 2. OvecboaloVskia has been farced.io.export 75 pc:remit of its shoe
production to tin Soviet Union at.pricas.far below the price on the domeotic
market. FOr exempla, ono shoe Daatory, Which has delivered 25 million-Pairo
or boots to the Soviet Union, received only 25 crowns a pair. Thin contraste
with. the controlled price of 500 crowns for the oheapast boot on the Czeohoslsvak
markot? and the official free market.prioa of 2,000 crouno. .
3. The USSR has exploited. Poland by foroing Poland to pay more than the
world price for Soviet goodo, while paying hardly .enough to cover the cost of
..Telioh production. For instance, in 1948 the. Soviet Union paid (4.75 a ton
far.Polibh pod1;.the'Fbl2ch cougnmorlaid.ovOir five times that amount? and
Poland the receivingwp to 115.50 a ton for coal exported to the West.
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4. Genclaoslovakie cold 100,000 than of.refined?sugar 'from Ito 1940-49
crop to the Soviet Union, end in Committed to sell 70,000 tona from its 1949-
50 crop. The Soviet Union paid a low' prico.fbr the sugar, then resold it out-
side of the orbit. Not only did the 'USSR compete with CzeOhoslovakia 'in the
.latterzonorial markets, tut ib. somo.csaps.undersold the ?Sachs with their
own. sugar. Bags fbr.this yearia crop nro narked ',USSR Export Sugar.r?
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In the case of Rumania, grain shippsd to the Soviet Union in 1948
weg used by the USSR to fulfill a auhatsUtial partion'ofito contract with the
UM. Rumanian lumber congigned to the Soviet Union was shippod Prom Rumanian
ports to Ugypt and cold by the USSR at prices Snot below those offered by the
Rumania'n Government..
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? 6. The Soviet-Hungarian Trade Agreement, valid 1 August 1948threngh
31 December 1949, illustrates how the USSR exploits and controls trade be-
tween the Satellites. The USSR, through its agency "SCOMPROlmweIT?" agreed
to 'deliver to Hungary 400,000 metric tons of blast fUrnace coke with the falai-
ng specifications: quality to be 170 kgs. per 241 kgs.? according to the
Sungran test; sot= sulphur content of 2 percent; minimum aim of 40 mme and
price of $23 per tan, f.o.b. Licartovce on the Czech-thusgarian border. By
April 1949 only 120,000 metric tons had been delivered, most of it Poliah
coke purchased by the USSR for 017.50 per metric ton. According to the terms
of the agreement, the USSR was to pay the freight charges from Vemimosti on
the Polish-Czech border to Licartovce, amounting to e4.32 per ton. Despite
repeated Hungarian protests coke consignments arrived in Licaitevce with
the freight unpaid. The trim and steel plants that received the coke were
compelled to pay the freight charges to wS03USPROMMORT,8 Thus the Soviet
Union owed $1,700,000 in January 1949 to the Hungarian iron and steel plants.
In February 1949, the USSR agreed with the Czech railroad administration that
the sum of $1,700,000 would be settled within the Soviet-Czechoslovak Clearing
Agreement and that the Czechs were to refund the already expended freight charges
to Hungary. By April 1949, the Czech? had not reimbursed Hungary: and the coke
consignments continued to arrive with the freight charges unpaid.
7. The Soviet Union seems to regard Satellite trade with the West as s
means both to obtain materials for itself and to fnrther exploit the Satellites.
When Poland concluded an agreement for high-grade ore from Sweden, the Soviet
Union increased its demande for iron products from Poland, thus depriving Poland
of the advantages of its agreement with Sweden.
8. About 70 percent Of the imports redeived by Rumania under its trade
agreement with Israel are destined for the Soviet Union.
9. Czechoslovakian agricultural production is hampered by obligatory ex-
ports to the USSR of superphosphate and other fertilizers. .
10; Tho USSR has exerted preesure on the Czechoslovakian textile industry
to supply established quotas of finished products, but fails to reciprocate with
needed raw materials. Similar pressure ban been exerted upon Poland and Hungary.
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U. The iron ore imported by Hungary from the Soviet Union in the
hematite ore found at Krivoi Rog (Fe content 52-56 percent). From 60-70
percent of this ore is either powdery or arrives in small pieces of 5 mm
In size. Its reduction is comparatively difficult, and its composition
varies with each shipment. Therefore, the use of thin ore in blast furnaces
to a degree higher than 20 percent, would be expedient only if the Hungarian
plants had adequate agglomeration (sintering) equipment.
According to an agreement concluded between MIK (the Hungarian
Ministry of Heavy industry) and the Soviet Government on 1 June 1947, 400,000
metric tone of Krivoi Rog ore were to be delivered to Hungary by 31 July 1948,
despite Hungarian inability to We 400,000 metric tons in a single year.
On 1 July 1948, the Soviet and Hungarian governments renegotiated an
agreement to last 17 months, that in, until 31 December 1949. The iron and
steel plants in Hungary, and consequently N/K, were willing to accept 100,000
metric tons of oro from the USSR if it were possible to obtain a higher quality
ore, crunhed into small pieces, with a low 5102 content, and if coke could also
be supplied with the ore. ,The USSR, however, forced the Lengarians to accept
300,000 metric tons of Krivoi Rog ore Of the sane quality as received before.
/t was agreed that the samo percentage of the shipments would be by rail,
that the Fe content would In not less than 55 percent/ the 5102 not over 13
percent and the H20 content not above 4 percent. The firct shipment arrived,
however, with an 3102 content of 18 percent. The Hungariann maintained that
the 13 percent figure applied to each coneignment, while the USSR claimed that it
referred to the entire 300,000 metric tons. The Hungarians eventually uere
forced to drop their complaint.
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12. Czechoelovak iron and steel production has bemahamperedsince the war
by being forced to consume Krivoi Rog iron ore from the USSR. Although Krivoi
Rog is known to have large deposits of high-grade iron ore, containing no sulphur
and phosphorous, Soviet authorities have been shipping to Czechoslovakia the
powdered tailings which the Germano left in their exploitation of Krivoi Rog.
The poor grade Krivoi Rog ore shipped to the Czechs has necessitated a greater
volume of ore per blast furnace charge, more fluxing and other ingredionto,
and has increased the cost of pig iron production. As a result, Czechoslovak
steel authorities have been making strenuous efforts to increase imports of
Iron ore from Sweden.
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13. A Soviet directive to the Czechoslovak metal pipe industry to
deliver large quantities of pip), principally oil field pipe, to the pssR
has prevented Czechoslovakia from meeting promised deliveries to other
countries.
14. The econeMy of the Soviet Zone of Germany has been hurt by
shortages of scrap iron and steel regulting from forced exports to the
USSR and the Satellites.
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/5. The retellites are famed to import some machinery from the USSR.
The machines offered by the USSR, however, are frequently of poor quality,
very old, expensive, delivered late, and lack operating instructions.
Quotatione for a Soviet longwall cutter of very old conatructionl.for example,
priced the machine at Res 600,000? or about three times as much as a modern
US or UK cutter would cost.
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16. Every month Czechoslovakia is Zeroed to abip thousand? of electric
.motors to the USSR. The meters require materials, principally copper, which
are in such short supply that production has often been slowed or temporarily
Suspended. If Czechoslovakia had been permitted to ship theist) motors to the
West, Czechoslovakia could have otftined foreign exchange to parch:Les needed
raw material unobtainable from the Soviet Union.
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17. The Bata plant at Zlin, Czechoslovakia has been receiving Soviet-
manufactured ball bearings as part payment for machinery which Bata manu-
factures for the Soviet Union.; Batt at first used Soviet ball bearings in
this machinery, but the USSR new insists that Swedish bearings be incorporated
into the equipment destined for the Soviet Union. The USSR has even rettrned
Older Dater-manufactured machinery to Zlin so that the Soviet bearings could
be replaced by Swedish bearings. This appears to be a tacit acknowledgement
by the USSR that it is exchanging inforior'products for those of higher quality.
Farther, Czechoslovak purchases of Swedish bearings for Soviet equipment drains
Czechoslovakia of much needed exchange.
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18. The USSR is absorbing about TO percent of East German industrial
production, thus causing critical shortages of needed materials and prevent,-
ing.economic recovery. The USSR further exploits bast Germany by buying
East German goods at low prices and.reexporting them at a profit. Foreign
trade of the Sovzone in 1949 was directed increasingly towards the. East,
with the Soviet Bait receiving 40 percant. The Sono delivered machine
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tool., as vell as precision, mechanece4,7sacal instruments. A large
part of these products vas reexported by the Soviet Union on its orn
acccunt.
19. At a meeting of the Conference of Nationalized Firma on 2S Hovedoor
1949, in Leipzig, regarding the 1950 trade agreement with USSR, it was stated
that production must be increased by at leant 30 percent above present lOvelo
preferably 50 percent -- because only the quantities produced in 02t030 of
the present output would be free for export.
20. During 1949 the USSR sold Czechoslovakia twenty IL-12 passenger
planes at a reported price of $2400000 each. The eight which ware delivered
during 1949 were found to be practically useless because of unreliable
flight instruments, poor engines, and generally ,shoddy constructioe. An
engine change was required every 300 h)urer spark plugs fouled after flights
of two hours, and the landing gear was unsatisfactory. The wings of the
delivered planes had already dropped several centimeters, even though the
planes had been given only moderate use. As a consequence the Czechs
grounded all of these planes indefinitely and cancelled all future deliveries.
There is no likelihood that the Czechs will get their money back for the planes
received.
21. The Soviet Union receives much of East Europeca production of new
transportation equipment. Furthermore, the USSR force? the Satellites to
overload their own equipment. In Hungary, for exemele? the USSR has forced the
Hungariann to operate 02,000 tont, freight trains. Since the maximum load
for the average Eastern European freight train has normally been about 750
tons, the increase seriously strains the eqpipment. ilaximum load limits of
freight cars have been revised upward and the period of service between in-
spection and overhaul has been increased. Hungierian railways carry almost
twice as meth ac prcuar and much of the freight carried is for Soviet benefit.
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22. Under 1950 trade pacts 75 percent of the entire export production
of Rumania, Bulgaria, and Hungary /a consigned to the Soviet Union. Rumanian
petroleum, for example, will be sold to the USSR at verld prices uhich are far
below production cost of Rumanian industry. Such control over the Rumanian
petroleum industry is made possible through the joint company, SovRom Petroleum.
The USSR is g-aranteed an annual profit from this company regardless of earninga.
Moreover, Rumanian oil will be re-sold at an additional profit by the USSR to
Czechoslovakia, Bulgaria, Hungnry, and Poland. In return the Soviet Union will
obtain valuable industrial commodities, such as motorcars, locomotives, and
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machinery from Czechoslovakia. Inferftor qielity items or tilos? not
especially nasal]. to the USSR will be re-exported to the Satellite countries.
Similarly, Bulgarian coal delivered to the Soviet Union is exported to other
Satellite countries in exchange for machinery and other products, while a
part of such machinery, usually agricultural, is re-exported to BrOgaria.
Direct trade between Eastern Daropean countries and the West is
either subordinated to the interest of the Soviet Union or reduced to a
minimum; for example, Czechoslovakia must procure large quantities of hides
from Argentina in order to make deliveries to the Soviet Union of ten milllon
pairs of first-class shoes.
In another tmy the Soviet Union monopolizes Satellite expert pro-
duction and foreign trade. The USSR sells Czechoslovak textiles to 'India and
and Polish coal and Bulgarian tobacco to Italy.
The recently increased valuation of the ruble in relation to other
currencies enables the US eg to procure products at a lower price than here-,
torero from the Satellites. Ebreover it affords the opportunity to the Soviet
Union to re-sell these products at a higher price under the guise of its own
manufacture.
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II. Soviet Exploitation of Satellites Through Joint Companies
The nature of Soviet economic exploitation through joint companies
in the Satellites was further revealed as a result of the Tito-Cominform
rift. Tito's charges against the USSR were sindldr to the charges made
earlier, in Nay /949, by the US delegate in the ECE Meetings at Geneva.
The USSR at that time sought to justify the existence of these companies
by claiming they represented the fairest method for utilizing German
assets in foraer Axis countries.
? The following instances drann from Yugoslav sources, are believed to
be reliable and illustrate Soviet use of the joint company as a mina of
exploiting the Satellites* (It should be emphasized that many other ex-
amples could have been included.)
1. Until its disaolution by the Yugoslav Government in July 1949,
MEAD (a joint company concerned eft& Danube River traffic) had been dom-
inated by a Soviet managing director who ignored his Yugoslav colleague in
.meking compmxy policies. JUSPAD was managed in favor of Soviet interests.
For example, transportdtion charges were rigged in favor of Soviet interests,
and business was directed to Soviet rather than Yugoslav river shipping, thus
costing Yugoslavia about 819,000,000 during the first year of operations.
Meanwhile the USSR had contributed less than 10 percent of its half of
the cepia.stock, whereas Yugoslavia had paid in more than 76 percent of
its 50 percent allotment.
2.* Although Yugoslavia and the USSR ostensibly were to share equally
in the operation of JUSTA, the joint Yugosler;Soviet airline, a Soviet Gen-
eral Director actually had complete authority.over operations. The USSR
centributed obsolete LI-Vis at a price of E500200 each, well above world
? market prices, while airfields. contributed by Yugoslavia were drastically
undervalued. Yugoslavia had to obtain ga.solina required for its airline
(JAT) from Rumania at the or three times the Warm' cost. The joint airline
was. allocated the most .profitable routes and sought to monopolize interr.
national traffic, while JAT was assigned unprofitable routes* JUSTA managed
all important airfields and charged JAT for the use of its awn landing fields.'
When.JUSTA was dissolved in 1949, the USSR demanded $140,000 for each of
the old planes which they had provided.
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3. The Yugoslav press reported the follcrwing?concerning joint.
Soviet-Rumanian companies: "The position of general directors in these
companies is held by Soviet citizena while lower positions of manage-
ment are given to Sreppinns, The functions of Rumanians are dedorative.
and honorary because Soviet representatives decide all.important questions,"
The same source also alleged that the USSR had not sent even one single
machine to the Joint company, Sovromtractor? which wad organized in
January 19490
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LII. Soviet-Dirocted BoonOmic Sanctione.A aia lavia
'After the Yugoslavt-Cominform break of June 1948, the Soviet orbit -
imposed the Kremlin-directed program of economic sanctions which ras
aimed to disrupt the Yugoslav: economy. The following examples of the
sanctions imposed are be/loved to be reliable. .
10 In a report on Toxviin policy in January 1950, Yugoelav'Foreign
Minister Kardelj declared: "You know that the USA; at negotiations
parried out tonard the end of 1946, reduced the volume of material. ex-
change with Yugoslavia by more than eight times, even though Yugoslavia
fella, executed all its obligations under the treaty. Further, the USSR,
to fulfill a credit of $135,000,000 on the basis of an inveotlent agree-
ment of 25 July 1947, delivered materials valued at only 002,003 until
tie middle of 1946 and then stopped fulfilling its obligation? ao? Beside?
this, the Administration of Soviet Property in Austria did not rent to
fulfill any of the obligations arising from the treaties concluded in 1947
and 1946 between it and Yugoslavia, according to uhich this Administration
was to deliver to Yugoslavia six turbines valued at $1,363,615 between the
end of November 2.946 and the and of December 19490 even though Yugoslavia
paid the entire deposit ,ad freight amounting to $773.650."
20 The Yugoslav' ministry of Heavy Industry is quoted as lotions:
"During 1949 the Soviet Union was to have delivered 2,500 tons of mangsnoso
ore, valued at 4.5 million dinaro,, but failed to do so. Yugoslavia paid
in advance, the sum of 420.6 million diners for shipments mhich were not
delivered during the year*"
3. Hungary had received advanced payments from Yugoslavia of 455 mil-
lion dinars against each goods totaling 217 million dinars were delivered
prior to the Tito-Cominform break. Hungary has refused to make restitution
ei the balance. In his speech of 27 December 1949, Hardolj claimed Hungary
vas given an advance of $26.5 million for investment in the joint aluminum
enterprise. Tho project was abandoned and Hungary refused to ropey the'
advance.
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L. On 6 July 1949, Poland suddenly announced the suspension of all
trade deliveries to Yugoslavia. Poland claimed that trade with Yugoslavia
? was broken off because of Yugoslav failure to meet its commitments; actually
Yugoslavia had mat 80 percent of its commitment* to Poland, whereas Poland
? had met only 67 percent of its .commitments to Yugoslavia.
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IV. Soviet Imposed Limitations an East-West Trade
Hilary Nine, Polish Minister of Economy, frankly stated in the Novi-
ember 1949 Comintern Journal that trade between East and West, in accord-
ance with Lenin's "New Economic Policy," is designed to make Eastern
European countries absolutely independent of the capitalist West, and not
to increase trade as etch. According to Eine, Satellite trade with the
Soviet Union will, in contrast, be permanent, and the Council of Economic
Nntual Assistance will serve as an organisation to foster this trade and
to provide for the "foundaticen and crystallisation of these essentially
new economic relations."
Despite repeated Soviet pronouncements in favor of expanded East-
West trade, the USSR has refused, thus far, to renew trade agreements with
Western Europe for 19506 Haanrlile, increasing Satellite antagonism to-
wards the Neat indicates that the Satallitee as well are preparing, under
the guise of "these essentially new economic relations," to further reduce
?canonic intercourse with the Western world. In more recent months, the
direct implementation of the announced policy of delimiting trade with the
West is evidenced by the following Soviet tactics in 1950 trade negotiations
with the West:
? le The USSR invariably demanded strategic items of military potential
in its negotiations with Western countries. In trade negotiations edth
Belgium, the Soviet Union requested such items as cobalt, industrial die-
ponds, steel products, and tine Similarly, the.France-Soviet talks wore'
stalenatecibecause the USSR insisted on oil takers, steamrollers, and
specialty steel. Tho USSR also demanded electrical equipment, ships, tin,
industrial diamonds, and rubber from The Netherlands.
26 Conversely, the USSR has refused to export items rhich the Western
countries wanted, and has attempted to force the Western countries to take
Soviet surplus cemmodities in excess of their needs, or has offered inferior
goods at excessive prices, The USS4 denied a Belgian request for white
clover and flax seed, and wanted the Belgians to take 200,000 metric tens
of grain, whereas they only 60-70,000 metric tons. Similarly, the
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USSR was unwilling to supply chrome and manganese to the French and offered
.to ship only one half or one quarter of Belgiumos manganese requirements.
30 More recently, the USSR has demanded a "favorable balance of trade"
with the West, In the case of Belgime, this request would have placed
Belgium in a position of a debtor to the extent of 865 million Belgian.
francs, Although the USSn had built up considerable surpluses in previous
years, it held-up payments for contracted Belgian merchandise?. Enploying
a similar tactic in negotiations with the French, the US3R'denanded an on
exchange, faith hard currency eettlenent favorable to the Soviet
Union,
In spite of the accumulated surplus of over 20 million kroner
? in 1949t the Soviet Union insisted cm continued .export surplus in its trade
withBerney for 1950 which would be payable to the USSR on demand in US
dollars or gold. Sweden and The Netherlands find themselves in a timilar
' position as debtor nations, thus enabling the ;USSR to extract substantial
sums of dollars,
40 The Kremlin has stalled Finnish-Soviet trade talks for several .
menthe.. The Soviet Union refused to vake clear Jibe position and rejected
Finland's proposal prnvisionally to carry on 1950 trade, During the nego-
tiations the USSR, in an obvious effort to exert pressure, stopped ship-
cants to Finland. More recent information indicates that the USSR has
finaLly decided to resume negotiations.'
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5. A Soviet purpose in utilizing obstructionist tactics in trade ne-
' gotiaticma with the West was recently disclosed by Mikoyan. He asserted
that the USA had no intention of assisting Western Europe close the dollar
gap by providing it with bread grains end other commodities otherwise ob-
tainable only in the dollar area. The sale of such commodities, according
to Mikoyan, would be made only In such quantities and for such periods*
tins as might suit the USSR.
In the March meeting in Geneva of the Agricultural Committee of
Economic Conmissiowfor Europe, the Soviet delegate stated his country was
prepared to sell large quantities of grains to Western Europe. Three dims
later, the Soviet delegate refused to agree to any concrete procedure for
implementing his proposal* The Soviet offer to sell grains therefore
appeared nerely a propaganda gesture.
In recent menthes the Satellites have followed the lead of the USSR
in taking steps calculated to reduce the extent of their economic relations
with the West.
10 In the fall of 1949, Poland denounced Provisione 1 and 8 of the
Polish-Itelien Payments Agreement of June 19149. The two provisions, favor-
able to Italy, related to taxation and nationalization of Italian property.
This unilateral action took place on the eve of negotiations for the price
of Polish coal to be delivered under 1949-50 trade pact and use instru-
mental in delaying agreement .on this question.
20 The arbitrary nationalization of foreign-owned property by the
? Hungarian Oovernnsmt resulted in Western European retaliation. Sweden
abrogated its recently concluded trade pact with Hungary, Switzerland
stopped its shipments of machine tools, and Hungarian-British trade talks
? were disrupted.
3. The ezochosiovak-Italian Trade Agreement provides for Italian dee
liveries of rolling mill equipment in exchange for Czechoslovak textiles
and other items. It has been Czechoslovakies practice to withhold
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.deliveries until the arrival of the Italian equipment. In numerous in-
stances, Czechoslovakia delivered inferior textiles and ignored Italian
claims for adjustment.
? !mist-imposed priorities have, in many instances, interfered with
the natural flew of Satellite foreign trade or prevented tbe.Satellites
from fulfilling their commitments to the West.
1. Under the Polish-Soviet Agreement of 1945, great quantities of the
Upper Silesian coal were delivered to the USSR at the lam price of $1.25
to $1.30 .per ton. The agreement specified that Poland was to deliver to
the USSR at preferential prices 8,0000000 tone of coal in 1946; 13,000,000
kens of coal dwring each of the years from 1947 to 19500 and 120000,000 tons
during:each of the following years of the Occupation of Germany by Soviet
troops. Meanwhile, Sweden was obliged to pay as meat as $15050 per ten
for Polish coal, Even under the current competitive condition, Poland
could obtain 89.80 per ton for coal exports to other Western countries.'
Thus, Poland not only loses considerable foreign exchange but is prevented
from trading with Western Europe.
2. Czechoslovakia eAported $203 million of goods. to Albania under a
1ong4rterm credit repayable during 1950-55. Similar long-term commoditir
credits, causing strain on the Czechoslovak economy: have been led to
other Satellite states, particularly to Rumania and Bulgaria. These agree-
ments have contributed to Czechoslovak delinqueney in deliveries to Western
*Europe. Czechoslovakia lost business in Belgium in early 1949 because of
its failure to keep delivery promises. Czechoslovakia net only about 30 per-
cent of its commitments under the 1949-50 trade pact with The Netherlands?
There has been a drastic reduction in trade between Switzerland and Gumbo-
slovakia.since the latter failed to meet its presrribed quotas (1949) of
shipments of such items as sugar, coke, and machinery, Likewise, Cacao-
slcmakia was unable to furnish Iemsrk with the rolled mill products and
Machinery desired under the 1950 Pact.
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3. Presumably because of Soviet requirements, Polish deliveries to
the lig have been reported as being unreasonably slow. Moreover, the
Polish Government is unwilling to increase quotas above the minimum pro-
vided by the pact and delve granting licenses for imports of British
goods. Tho UK, on the other hand, is milling to continue and expand
trade and has granted short.-term credits to finance Polish purchases, such
as W0020
46 OS a result of Soviet exploitation, East Gensmay is unable to
meet or is sloe in fulfilling its trade commitments to the Westo As long
as the USSR has top priority: East Gummy has difficulty/ and in some .
cases cannot meet all its trade commitments even to the .Satellites. In
fact, Fast Germany can export goods only after fulfilling its obligations
for commercial shipments to the Soviet Union, Soviet reparations shipments,
and filling the demands of the Soviet Military and Contracting 881024
Sovzone policy is to make itself as independent of the West as
possible, and to but there only those items whida cannot be obtained from
the East. The East Berlin press of 6 October 1949 announced openly that
future trade policy should be directed toward the best possible relations
with Eastern Europe and that Western EtrOpe and the US mould have only a
relatively insignificant rola,
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