German-Soviet Commercial Agreement
Encyclopedia
The German–Soviet Credit Agreement (also referred to as the German–Soviet Trade and Credit Agreement) was an economic arrangement between the Soviet Union
and Nazi Germany
whereby Soviet Union received an acceptance credit of 200 million Reichsmark. over 7 years with an affective interest rate of 4.5 percent. The credit line was to be used during the next two years for purchase of capital goods (factory equipment, installations, machinery and machine tools, ships, vehicles, and other means of transport) in Germany and was to be paid off by means of Soviet material shipment from 1946 onwards. The economic agreement was the first step toward improvement in relations between the Soviet Union and Germany. The next day after the Credit Agreement, the Soviet Union went to war against Japan, in a successful four-week military campaign in the Far East. The Nazi-Soviet Pact was signed four days after the Credit Agreement. The 1939 German–Soviet Commercial Agreement renewed declined Nazi–Soviet economic relations and was adjusted and expanded with the larger German–Soviet Commercial Agreement in February of 1940
and January 1941 German–Soviet Border and Commercial Agreement
. All these agreements were terminated when Germany invaded the Soviet Union
in June 1941, in violation of the treaties between the two countries. Soviet trade with Germany in the pre-invasion period ended up providing the Germans with many of the resources they needed for their invasion of the Soviet Union.
decreased Germany's reliance on Soviet imports.
of the Nazi Party increased tensions between Germany and the Soviet Union, with Nazi racial ideology
casting the Soviet Union as populated by "untermensch
en" ethnic Slavs ruled by their "Jewish Bolshevik
" masters. Even with rising tensions, in the mid-1930s, the Soviet Union made repeated efforts to reestablish closer contacts with Germany., which were rebuffed by Hitler, who wished to steer clear of such political ties.
Relations further declined in 1936, when Germany supported the Fascist Spanish Nationalists in the Spanish Civil War
, while the Soviets supported the partially socialist-led Spanish Republic
opposition, Germany and Japan entered the Anti-Comintern Pact
. and Soviet great purge
s disrupted Soviet diplomacy.
n soybeans could make up the shortfall. Meanwhile, the Soviet Union required, in the short term, military equipment and weapon designs to strengthen the weakened Red Army
and Red Navy. The Soviet transportation network was woefully underdeveloped, with roads approaching non-existence and rail lines already stretched to their limits.
After the Anschluss
in mid-1938, economic reconciliation was hampered by political tension and Hitler's increasing hesitance to deal with the Soviet Union. However, German needs for military supplies and Soviet needs for military machinery increased after the Munich Agreement
.
and then the Klaipėda Region
(Memel), making a German war with Poland far more likely.
Germany and the Soviet Union discussed entering into an economic deal throughout early 1939. During spring and summer 1939, the Soviets negotiated a political and military pact with France and Britain, while at the same time talking with German officials about a potential political Soviet–German agreement. On April 7, Soviet diplomat Georgii Astakhov stated to the German Foreign Ministry that there was no point in continuing the German–Soviet ideological struggle and that the two countries could come to an agreement. Ten days later, Soviet ambassador Alexei Merekalov met with German State Secretary Ernst Weizsacker and presented him a note requesting speedy removal of any obstacles for fulfillment of military contracts signed between Czechoslovakia and the USSR before the former was occupied by Germany. According to German accounts, at the end of the discussion the ambassador stated "there exists for Russia no reason why she should not live with us on a normal footing. And from normal the relations might become better and better." Other sources claim that it could be an exaggeration or inaccurate recounting of the ambassador's words. Immediately after the meeting, the Soviet ambassador had been withdrawn to Moscow and never returned to Germany.
Likelihood of war increased military production in both Germany and the Soviet Union. The Soviets' Third Five Year Plan would require massive new infusions of technology and industrial equipment. Meanwhile, German military spending increased to 23% of gross national product in 1939. German planners in April and May 1939 feared that a cessation of Swedish trade would cut key iron ore supplies. Without Soviet supplies, it was estimated that Germany would need to find substitutes for approximately 165,000 tons of manganese and almost 2 million tons of oil per year. Germany already faced severe rubber shortages because of British and Dutch refusals to trade. In addition to domestic food fat and oil importation reliance, other food problems arose from labor shortages in the agricultural sector that required the work of schoolchildren and students. On May 8, German officials estimated that Germany had oil reserves for only 3.1 months.
In the context of further economic discussions, on May 17, Astakhov told a German official that he wanted to restate "in detail that there were no conflicts in foreign policy between Germany and Soviet Russia and that therefore there was no reason for any enmity between the two countries." Three days later, on May 20, Molotov told the German ambassador in Moscow that he no longer wanted to discuss only economic matters, and that it was necessary to establish a "political basis", which German officials saw an "implicit invitation" and a "virtual summoning us to a political dialogue." On May 26, German officials feared a potential positive result to come from the Soviets talks regarding proposals by Britain and France. On May 30, Germany directed its diplomats in Moscow that "we have now decided to undertake definite negotiations with the Soviet Union." The ensuing discussions were channeled through the economic negotiation, because the economic needs of the two sides were substantial and because close military and diplomatic connections had been severed in the mid-1930s after the creation of the Anti-Comintern Pact
and the Spanish Civil War
, leaving these talks as the only means of communication.
The Soviets sent mixed signals thereafter. On May 31, Molotov's speech appeared to be positive, while on June 2 Soviet Commissar for Foreign Trade Mikoyan told a German official that Moscow "had lost all interest in these [economic] negotiations as a result of earlier German procrastination." On June 15, the Soviet ambassador held a discussion with the Bulgarian ambassador in Berlin, Purvan Draganov, who served as an unofficial intermediary for negotiations with the Germans.
The Soviet ambassador explained that a deal with Germany better suited Soviet needs than a deal with Britain and France or inconclusive negotiations resulting in no deal. Draganov promptly informed the German Foreign Ministry of the conversation. Seven days earlier, the Soviets had agreed that a high ranking German official would come to Moscow to continue the negotiations, which occurred in Moscow on July 3. Thereafter, official talks were started in Berlin on July 22.
Meanwhile, hoping to stop the German war machine, in July, Britain conducted talks with Germany regarding a potential plan to bail out the debt-ridden German economy at the cost of one billion pounds in exchange for Germany ending its armaments program. The British press broke the story and Germany eventually rejected the offer.
and the Black Sea
that could not be solved between the two of us."
The Germans discussed prior hostilities between the countries in the 1930s. They addressed their common ground of anti-capitalism
, stating "there is one common element in the ideology of Germany, Italy and the Soviet Union: opposition to the capitalist democracies," "neither we nor Italy have anything in common with the capitalist west" and "it seems to us rather unnatural that a socialist state would stand on the side of the western democracies." The Germans explained that their prior hostility toward Soviet Bolshevism had subsided with the changes in the Comintern
and the Soviet renunciation of a world revolution
. Astakhov characterized the conversation as "extremely important."
As Germany scheduled its invasion of Poland for August 25 and prepared for war with France, German war planners in August estimated that, with an expected British naval blockade and the hostile Soviet Union, Germany would fall short of its war mobilization requirements by 9.9 million tons of oil and 260,000 tons of manganese. At that time, Germany was still importing 20% of foodstuffs, 66% of oil and 80% of rubber. It possessed only two to three months of rubber and three to six months of oil supplies. Because of the expected naval blockade, the Soviet Union would become the only supplier for many items.
On August 5, Soviet officials stated that the completion of the trading credit agreement was crucial for further political talks. Hitler himself telephoned to interrupt economic talks, pushing for a settlement. By August 10, the countries worked out the last minor technical details, but the Soviets delayed signing the economic agreement for almost ten days until they were sure that they had also reached a political agreement. The Soviet ambassador explained that the Soviets had begun their British negotiations "without much enthusiasm" at a time when they felt Germany would not "come to an understanding," and the parallel talks with the British could not be simply broken off when they had been initiated after "mature consideration." Meanwhile, every internal German military and economic study had argued that Germany was doomed to defeat without at least Soviet neutrality. The Wehrmacht High Command issued a report that Germany could only be safe from a blockade on the basis of close economic cooperation with the Soviet Union.
While the treaty was ready at 4 pm on August 19, the Soviets announced that they could not sign it that day, worrying German officials that the Soviets were delaying for political reasons. When TASS
published a report that the Soviet–British–French talks had become snarled over the Far East and "entirely different matters," Germany took it as a signal that there was still time and hope to reach a Soviet–German deal. At 2 am on August 20, Germany and the Soviet Union signed the trade agreement, dated August 19, in Berlin providing for the trade of certain German military and civilian equipment in exchange for Soviet raw materials.
The agreement covered "current" business, which entailed Soviet obligations to deliver 180 million Reichsmarks in raw materials and German commitment to provide the Soviets with 120 million Reichsmarks of German industrial goods. Under the agreement, Germany also granted the Soviet Union a merchandise credit of 200 million Reichsmarks over 7 years to be financed by the German Gold Discount Bank. The credit was to be used to finance Soviet "new business" orders in Germany to include machinery, manufactured goods, war materials and hard currency
. This loan would be 100% guaranteed by the German government with a 5% interest rate. However, the agreement contained a "Confidential Protocol" providing that the German government would refund 0.5% of the interest, making the effective rate 4.5%. The terms were extremely favorable, at 1.5–2.5% lower as compared to discount rates than such credit lines in the 1920s and early 1930s. The Soviet Union would start to pay off the loan with raw materials seven years later (beginning in 1946).
German Foreign Ministry official Karl Schnurre noted at the time that "[t]he movement of goods envisaged by the agreement might therefore reach a total of more than 1 billion Reichsmarks for the next few years." Schnurre also wrote "[a]part 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." Pravda
published an
article on August 21 declaring that the August 19 commercial agreement "may appear as a serious step in the cause of improving not only economic, but also political relations between the USSR and Germany." Molotov wrote in Pravda that the August 19 deal was "better than all earlier treaties" and "we have never managed to reach such a favorable economic agreement with Britain, France or any other country."
Early in the morning of August 24, the Soviet Union and Germany signed the political and military deal that accompanied the trade agreement, the Molotov–Ribbentrop Pact. The pact was an agreement of mutual non-aggression between the countries. It contained secret protocols dividing the states of Northern
and Eastern Europe
into German and Soviet "spheres of influence." At the time, Stalin considered the trade agreement to be more important than the non-aggression pact.
At the signing, Ribbentrop and Stalin enjoyed warm conversations, exchanged toasts and further addressed the prior hostilities between the countries in the 1930s. They characterized Britain as always attempting to disrupt Soviet-German relations, stated that the Anti-Comintern pact was not aimed at the Soviet Union, but actually aimed at Western democracies and "frightened principally the City of London [i.e., the British financiers] and the English shopkeepers."
In 2010, Timothy Snyder
linked the improvement in Nazi-Soviet relations in 1939 to Stalin's objective of disrupting the Anti-Comintern Pact
and waging war on Japan. Snyder said:
After the German invasion
, to administer the economic blockade of Germany, the British Ministry of Economic Warfare
was established on September 3, 1939 By April 1940 Britain realized that blockade appeared not to be working because of "leaks" in blockade with two major "holes" at the Black Sea and Mediterranean provided by several neutrals countries, including Italy.
On September 17, the Red Army
invaded eastern Poland and occupied the Polish territory
which held up to 70 per cent of Poland's pre-war oil production.
In October three German trade partners - Baltic States
– Estonia
, Latvia
, and Lithuania
– were given no choice but to sign a so-called Pact of defense and mutual assistance which permitted the Soviet Union to station troops in them.
German-Soviet tensions were also raised by the Soviet invasion of Finland
started at November 1939. Several German merchant ships were damaged
Germany and the Soviet Union continued economic, military and political negotiations throughout the last half of 1939, which resulted in a much larger German–Soviet Commercial Agreement
was signed on February 11, 1940. Under that agreement, the Soviet Union became a major supplier of vital materials to Germany, including petroleum, manganese, copper, nickel, chrome, platinum, lumber and grain.
They also received considerable amounts of other vital raw materials, including manganese ore, along with the transit of one million tons of soybeans from Manchuria. On January 10, 1941, the countries signed an additional agreement
modifying their 1940 commercial agreement, adjusting borders, and resolving other minor disputes.
During both the first period of the 1940 agreement (February 11, 1940 to February 11, 1941) and the second (February 11, 1941 until the Pact was broken), Germany received massive quantities of raw materials, including over:
In August 1940, Soviet imports comprised over 50% of Germany's total overseas imports, which declined at this time to 20.4 thousands of tons.
The alliance ended when Germany began Operation Barbarossa
and invaded the Soviet Union on June 22, 1941. The various items that the USSR has sent to Germany from 1939 to 1941 in significant amount, can be substituted or obtained by increased imports from other countries.
Without Soviet deliveries of these major items, Germany could barely have attacked the Soviet Union, let alone come close to victory, even with more intense rationing.
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
and Nazi Germany
Nazi Germany
Nazi Germany , also known as the Third Reich , but officially called German Reich from 1933 to 1943 and Greater German Reich from 26 June 1943 onward, is the name commonly used to refer to the state of Germany from 1933 to 1945, when it was a totalitarian dictatorship ruled by...
whereby Soviet Union received an acceptance credit of 200 million Reichsmark. over 7 years with an affective interest rate of 4.5 percent. The credit line was to be used during the next two years for purchase of capital goods (factory equipment, installations, machinery and machine tools, ships, vehicles, and other means of transport) in Germany and was to be paid off by means of Soviet material shipment from 1946 onwards. The economic agreement was the first step toward improvement in relations between the Soviet Union and Germany. The next day after the Credit Agreement, the Soviet Union went to war against Japan, in a successful four-week military campaign in the Far East. The Nazi-Soviet Pact was signed four days after the Credit Agreement. The 1939 German–Soviet Commercial Agreement renewed declined Nazi–Soviet economic relations and was adjusted and expanded with the larger German–Soviet Commercial Agreement in February of 1940
German–Soviet Commercial Agreement (1940)
The 1940 German-Soviet Commercial Agreement was an economic arrangement between the Soviet Union and Nazi Germany signed on February 11, 1940 by which the Soviet Union agreed in period from February 11, 1940 to February 11, 1941, in addition to the deliveries...
and January 1941 German–Soviet Border and Commercial Agreement
German–Soviet Border and Commercial Agreement
The German–Soviet Border and Commercial Agreement, signed on January 10, 1941, was a broad agreement settling border disputes and continuing raw materials and war machine trade between the Soviet Union and Nazi Germany...
. All these agreements were terminated when Germany invaded the Soviet Union
Operation Barbarossa
Operation Barbarossa was the code name for Germany's invasion of the Soviet Union during World War II that began on 22 June 1941. Over 4.5 million troops of the Axis powers invaded the USSR along a front., the largest invasion in the history of warfare...
in June 1941, in violation of the treaties between the two countries. Soviet trade with Germany in the pre-invasion period ended up providing the Germans with many of the resources they needed for their invasion of the Soviet Union.
Traditional commerce and pre-Nazi trade
Germany lacks natural resources, including several key raw materials needed for economic and military operations. Since the late 19th century, it had relied heavily upon Russian imports of such materials. Before World War I, Germany imported 1.5 billion Reichsmarks of raw materials and other goods per year from Russia. Such imports fell sharply after World War I. In the early 1930s, Soviet imports decreased as the more isolationist Stalinist regime asserted power and dwindling adherence to the disarmament requirements of the Treaty of VersaillesTreaty of Versailles
The Treaty of Versailles was one of the peace treaties at the end of World War I. It ended the state of war between Germany and the Allied Powers. It was signed on 28 June 1919, exactly five years after the assassination of Archduke Franz Ferdinand. The other Central Powers on the German side of...
decreased Germany's reliance on Soviet imports.
Deteriorating relations
The rise to powerMachtergreifung
Machtergreifung is a German word meaning "seizure of power". It is normally used specifically to refer to the Nazi takeover of power in the democratic Weimar Republic on 30 January 1933, the day Hitler was sworn in as Chancellor of Germany, turning it into the Nazi German dictatorship.-Term:The...
of the Nazi Party increased tensions between Germany and the Soviet Union, with Nazi racial ideology
Racial policy of Nazi Germany
The racial policy of Nazi Germany was a set of policies and laws implemented by Nazi Germany, asserting the superiority of the "Aryan race", and based on a specific racist doctrine which claimed scientific legitimacy...
casting the Soviet Union as populated by "untermensch
Untermensch
Untermensch is a term that became infamous when the Nazi racial ideology used it to describe "inferior people", especially "the masses from the East," that is Jews, Gypsies, Poles along with other Slavic people like the Russians, Serbs, Belarussians and Ukrainians...
en" ethnic Slavs ruled by their "Jewish Bolshevik
Jewish Bolshevism
Jewish Bolshevism, Judeo-Bolshevism, and known as Żydokomuna in Poland, is an antisemitic stereotype based on the claim that Jews have been the driving force behind or are disproportionately involved in the modern Communist movement, or sometimes more specifically Russian Bolshevism.The expression...
" masters. Even with rising tensions, in the mid-1930s, the Soviet Union made repeated efforts to reestablish closer contacts with Germany., which were rebuffed by Hitler, who wished to steer clear of such political ties.
Relations further declined in 1936, when Germany supported the Fascist Spanish Nationalists in the Spanish Civil War
Spanish Civil War
The Spanish Civil WarAlso known as The Crusade among Nationalists, the Fourth Carlist War among Carlists, and The Rebellion or Uprising among Republicans. was a major conflict fought in Spain from 17 July 1936 to 1 April 1939...
, while the Soviets supported the partially socialist-led Spanish Republic
Second Spanish Republic
The Second Spanish Republic was the government of Spain between April 14 1931, and its destruction by a military rebellion, led by General Francisco Franco....
opposition, Germany and Japan entered the Anti-Comintern Pact
Anti-Comintern Pact
The Anti-Comintern Pact was an Anti-Communist pact concluded between Nazi Germany and the Empire of Japan on November 25, 1936 and was directed against the Communist International ....
. and Soviet great purge
Great Purge
The Great Purge was a series of campaigns of political repression and persecution in the Soviet Union orchestrated by Joseph Stalin from 1936 to 1938...
s disrupted Soviet diplomacy.
Late 1930s economic needs
By the late 1930s, because an autarkic economic approach or an alliance with Britain were impossible, Germany needed to arrange closer relations with the Soviet Union, if not just for economic reasons alone. Germany lacked key supplies, such as oil and food, metal ores and rubber, for which it relied upon Soviet supply or transit, and had to look to Russia and Romania. Moreover, Germany's food requirements would grow further if it conquered nations that were also net food importers. Soviet imports of Ukrainian grains or Soviet transshipments of ManchuriaManchuria
Manchuria is a historical name given to a large geographic region in northeast Asia. Depending on the definition of its extent, Manchuria usually falls entirely within the People's Republic of China, or is sometimes divided between China and Russia. The region is commonly referred to as Northeast...
n soybeans could make up the shortfall. Meanwhile, the Soviet Union required, in the short term, military equipment and weapon designs to strengthen the weakened Red Army
Red Army
The Workers' and Peasants' Red Army started out as the Soviet Union's revolutionary communist combat groups during the Russian Civil War of 1918-1922. It grew into the national army of the Soviet Union. By the 1930s the Red Army was among the largest armies in history.The "Red Army" name refers to...
and Red Navy. The Soviet transportation network was woefully underdeveloped, with roads approaching non-existence and rail lines already stretched to their limits.
After the Anschluss
Anschluss
The Anschluss , also known as the ', was the occupation and annexation of Austria into Nazi Germany in 1938....
in mid-1938, economic reconciliation was hampered by political tension and Hitler's increasing hesitance to deal with the Soviet Union. However, German needs for military supplies and Soviet needs for military machinery increased after the Munich Agreement
Munich Agreement
The Munich Pact was an agreement permitting the Nazi German annexation of Czechoslovakia's Sudetenland. The Sudetenland were areas along Czech borders, mainly inhabited by ethnic Germans. The agreement was negotiated at a conference held in Munich, Germany, among the major powers of Europe without...
.
Early deal talks regarding economics and other issues
In October 1938, Germany started pushing for expansion of economic ties between the two countries and presented a plan to the Soviets on December 1, 1938. Stalin, however, was not willing to sell his increasingly strong economic bargaining position for the small price that Hitler was then willing to offer. The Soviets were willing to engage in talks discussing a new German offer in February and March 1939 in Moscow. Germany put the talks on hold in mid-March. A few days thereafter, Germany occupied CzechoslovakiaGerman occupation of Czechoslovakia
German occupation of Czechoslovakia began with the Nazi annexation of Czechoslovakia's northern and western border regions, known collectively as the Sudetenland, under terms outlined by the Munich Agreement. Nazi leader Adolf Hitler's pretext for this effort was the alleged privations suffered by...
and then the Klaipėda Region
1939 German ultimatum to Lithuania
1939 German ultimatum to Lithuania was an oral ultimatum presented to Juozas Urbšys, Foreign Minister of Lithuania, by Joachim von Ribbentrop, Foreign Minister of Nazi Germany, on March 20, 1939...
(Memel), making a German war with Poland far more likely.
Likelihood of war increased military production in both Germany and the Soviet Union. The Soviets' Third Five Year Plan would require massive new infusions of technology and industrial equipment. Meanwhile, German military spending increased to 23% of gross national product in 1939. German planners in April and May 1939 feared that a cessation of Swedish trade would cut key iron ore supplies. Without Soviet supplies, it was estimated that Germany would need to find substitutes for approximately 165,000 tons of manganese and almost 2 million tons of oil per year. Germany already faced severe rubber shortages because of British and Dutch refusals to trade. In addition to domestic food fat and oil importation reliance, other food problems arose from labor shortages in the agricultural sector that required the work of schoolchildren and students. On May 8, German officials estimated that Germany had oil reserves for only 3.1 months.
In the context of further economic discussions, on May 17, Astakhov told a German official that he wanted to restate "in detail that there were no conflicts in foreign policy between Germany and Soviet Russia and that therefore there was no reason for any enmity between the two countries." Three days later, on May 20, Molotov told the German ambassador in Moscow that he no longer wanted to discuss only economic matters, and that it was necessary to establish a "political basis", which German officials saw an "implicit invitation" and a "virtual summoning us to a political dialogue." On May 26, German officials feared a potential positive result to come from the Soviets talks regarding proposals by Britain and France. On May 30, Germany directed its diplomats in Moscow that "we have now decided to undertake definite negotiations with the Soviet Union." The ensuing discussions were channeled through the economic negotiation, because the economic needs of the two sides were substantial and because close military and diplomatic connections had been severed in the mid-1930s after the creation of the Anti-Comintern Pact
Anti-Comintern Pact
The Anti-Comintern Pact was an Anti-Communist pact concluded between Nazi Germany and the Empire of Japan on November 25, 1936 and was directed against the Communist International ....
and the Spanish Civil War
Spanish Civil War
The Spanish Civil WarAlso known as The Crusade among Nationalists, the Fourth Carlist War among Carlists, and The Rebellion or Uprising among Republicans. was a major conflict fought in Spain from 17 July 1936 to 1 April 1939...
, leaving these talks as the only means of communication.
Mixed signals
The Soviet ambassador explained that a deal with Germany better suited Soviet needs than a deal with Britain and France or inconclusive negotiations resulting in no deal. Draganov promptly informed the German Foreign Ministry of the conversation. Seven days earlier, the Soviets had agreed that a high ranking German official would come to Moscow to continue the negotiations, which occurred in Moscow on July 3. Thereafter, official talks were started in Berlin on July 22.
Meanwhile, hoping to stop the German war machine, in July, Britain conducted talks with Germany regarding a potential plan to bail out the debt-ridden German economy at the cost of one billion pounds in exchange for Germany ending its armaments program. The British press broke the story and Germany eventually rejected the offer.
Addressing past hostilities and finalizing the deals
On July 25, the Soviet Union and Germany were very close to finalizing the terms of a proposed economic deal. On July 26, over dinner, the Soviets accepted a proposed three-stage agenda which included the economic agenda first and "a new arrangement which took account of the vital political interests of both parties." On August 1, the Soviets raised two conditions before political negotiations could begin: a new economic treaty and the cessation of anti-Soviet attacks by German media. The Germans immediately agreed. Two days later, German Foreign Minister Joachim Ribbentrop outlined a plan where the countries would agree to nonintervention in the others' affairs and would renounce measures aimed at the others' vital interests and that "there was no problem between the BalticBaltic Sea
The Baltic Sea is a brackish mediterranean sea located in Northern Europe, from 53°N to 66°N latitude and from 20°E to 26°E longitude. It is bounded by the Scandinavian Peninsula, the mainland of Europe, and the Danish islands. It drains into the Kattegat by way of the Øresund, the Great Belt and...
and the Black Sea
Black Sea
The Black Sea is bounded by Europe, Anatolia and the Caucasus and is ultimately connected to the Atlantic Ocean via the Mediterranean and the Aegean seas and various straits. The Bosphorus strait connects it to the Sea of Marmara, and the strait of the Dardanelles connects that sea to the Aegean...
that could not be solved between the two of us."
Anti-capitalism
Anti-capitalism describes a wide variety of movements, ideas, and attitudes which oppose capitalism. Anti-capitalists, in the strict sense of the word, are those who wish to completely replace capitalism with another system....
, stating "there is one common element in the ideology of Germany, Italy and the Soviet Union: opposition to the capitalist democracies," "neither we nor Italy have anything in common with the capitalist west" and "it seems to us rather unnatural that a socialist state would stand on the side of the western democracies." The Germans explained that their prior hostility toward Soviet Bolshevism had subsided with the changes in the Comintern
Comintern
The Communist International, abbreviated as Comintern, also known as the Third International, was an international communist organization initiated in Moscow during March 1919...
and the Soviet renunciation of a world revolution
World revolution
World revolution is the Marxist concept of overthrowing capitalism in all countries through the conscious revolutionary action of the organized working class...
. Astakhov characterized the conversation as "extremely important."
As Germany scheduled its invasion of Poland for August 25 and prepared for war with France, German war planners in August estimated that, with an expected British naval blockade and the hostile Soviet Union, Germany would fall short of its war mobilization requirements by 9.9 million tons of oil and 260,000 tons of manganese. At that time, Germany was still importing 20% of foodstuffs, 66% of oil and 80% of rubber. It possessed only two to three months of rubber and three to six months of oil supplies. Because of the expected naval blockade, the Soviet Union would become the only supplier for many items.
On August 5, Soviet officials stated that the completion of the trading credit agreement was crucial for further political talks. Hitler himself telephoned to interrupt economic talks, pushing for a settlement. By August 10, the countries worked out the last minor technical details, but the Soviets delayed signing the economic agreement for almost ten days until they were sure that they had also reached a political agreement. The Soviet ambassador explained that the Soviets had begun their British negotiations "without much enthusiasm" at a time when they felt Germany would not "come to an understanding," and the parallel talks with the British could not be simply broken off when they had been initiated after "mature consideration." Meanwhile, every internal German military and economic study had argued that Germany was doomed to defeat without at least Soviet neutrality. The Wehrmacht High Command issued a report that Germany could only be safe from a blockade on the basis of close economic cooperation with the Soviet Union.
Economic deal
Telegraph Agency of the Soviet Union
The Telegraph Agency of the Soviet Union , was the central agency for collection and distribution of internal and international news for all Soviet newspapers, radio and television stations...
published a report that the Soviet–British–French talks had become snarled over the Far East and "entirely different matters," Germany took it as a signal that there was still time and hope to reach a Soviet–German deal. At 2 am on August 20, Germany and the Soviet Union signed the trade agreement, dated August 19, in Berlin providing for the trade of certain German military and civilian equipment in exchange for Soviet raw materials.
The agreement covered "current" business, which entailed Soviet obligations to deliver 180 million Reichsmarks in raw materials and German commitment to provide the Soviets with 120 million Reichsmarks of German industrial goods. Under the agreement, Germany also granted the Soviet Union a merchandise credit of 200 million Reichsmarks over 7 years to be financed by the German Gold Discount Bank. The credit was to be used to finance Soviet "new business" orders in Germany to include machinery, manufactured goods, war materials and hard currency
Hard currency
Hard currency , in economics, refers to a globally traded currency that is expected to serve as a reliable and stable store of value...
. This loan would be 100% guaranteed by the German government with a 5% interest rate. However, the agreement contained a "Confidential Protocol" providing that the German government would refund 0.5% of the interest, making the effective rate 4.5%. The terms were extremely favorable, at 1.5–2.5% lower as compared to discount rates than such credit lines in the 1920s and early 1930s. The Soviet Union would start to pay off the loan with raw materials seven years later (beginning in 1946).
Political deal and secret protocol
German Foreign Ministry official Karl Schnurre noted at the time that "[t]he movement of goods envisaged by the agreement might therefore reach a total of more than 1 billion Reichsmarks for the next few years." Schnurre also wrote "[a]part 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." Pravda
Pravda
Pravda was a leading newspaper of the Soviet Union and an official organ of the Central Committee of the Communist Party between 1912 and 1991....
published an
article on August 21 declaring that the August 19 commercial agreement "may appear as a serious step in the cause of improving not only economic, but also political relations between the USSR and Germany." Molotov wrote in Pravda that the August 19 deal was "better than all earlier treaties" and "we have never managed to reach such a favorable economic agreement with Britain, France or any other country."
Early in the morning of August 24, the Soviet Union and Germany signed the political and military deal that accompanied the trade agreement, the Molotov–Ribbentrop Pact. The pact was an agreement of mutual non-aggression between the countries. It contained secret protocols dividing the states of Northern
Northern Europe
Northern Europe is the northern part or region of Europe. Northern Europe typically refers to the seven countries in the northern part of the European subcontinent which includes Denmark, Estonia, Latvia, Lithuania, Norway, Finland and Sweden...
and Eastern Europe
Eastern Europe
Eastern Europe is the eastern part of Europe. The term has widely disparate geopolitical, geographical, cultural and socioeconomic readings, which makes it highly context-dependent and even volatile, and there are "almost as many definitions of Eastern Europe as there are scholars of the region"...
into German and Soviet "spheres of influence." At the time, Stalin considered the trade agreement to be more important than the non-aggression pact.
At the signing, Ribbentrop and Stalin enjoyed warm conversations, exchanged toasts and further addressed the prior hostilities between the countries in the 1930s. They characterized Britain as always attempting to disrupt Soviet-German relations, stated that the Anti-Comintern pact was not aimed at the Soviet Union, but actually aimed at Western democracies and "frightened principally the City of London [i.e., the British financiers] and the English shopkeepers."
In 2010, Timothy Snyder
Timothy Snyder
Timothy D. Snyder is an American professor of history at Yale University, specializing in the history of Central and Eastern Europe, as well as the Holocaust...
linked the improvement in Nazi-Soviet relations in 1939 to Stalin's objective of disrupting the Anti-Comintern Pact
Anti-Comintern Pact
The Anti-Comintern Pact was an Anti-Communist pact concluded between Nazi Germany and the Empire of Japan on November 25, 1936 and was directed against the Communist International ....
and waging war on Japan. Snyder said:
"On 20 August 1939, Hitler sent a personal message to Stalin, asking him to receive Ribbentrop no later than the twenty-third. Ribbentrop made for Moscow, where, as both Orwell and Koestler noted, swastikas adorned the airport of the capital of the homeland of socialism. This, the final ideological shock that separated Koestler from communism, was really a sign that the Soviet Union was no longer an ideological state. The two regimes immediately found common ground in their mutual aspiration to destroy Poland ...the Soviet Union had agreed to attack Poland along with Germany. ... In August and September 1939, Stalin was reading maps not just of east Europe but of east Asia. He had found an opportunity to improve the Soviet position in the Far East. ...Stalin could now be confident that no German-Polish attack was coming from the west... The Soviets (and their Mongolian allies) attacked Japanese (and puppet Manchukuo) forces... on 20 August 1939. Stalin's policy of rapprochement with Berlin of August 23, 1939 was also directed against Tokyo. The Molotov-Ribbentrop Pact between Germany and the Soviet Union, signed three days after the offensive, nullified the Anti-Comintern Pact between Germany and Japan. Even more than the battlefield defeat, the Nazi-Soviet alliance brought a political earthquake to Tokyo. The Japanese government fell, as would several more in the coming months. Once Germany seemed to have chosen the Soviet Union rather than Japan as its ally, the Japanese government found itself in an unexpected and confusing situation... if the union between Moscow and Berlin held, the Red Army would be able to concentrate its forces in Asia rather than in Europe. ... Hitler had given Stalin a free hand in Asia, and the Japanese could only hope that Hitler would betray his new friend. ... When the Red Army defeated the Japanese, on 15 September, Stalin had achieved exactly the result that he wanted. ... Stalin had replaced the phantom of a German-Polish-Japanese encirclement of the Soviet Union with a very real German-Soviet encirclement of Poland, an alliance that isolated Japan."
Later events and total trade
After the German invasion
Invasion of Poland (1939)
The Invasion of Poland, also known as the September Campaign or 1939 Defensive War in Poland and the Poland Campaign in Germany, was an invasion of Poland by Germany, the Soviet Union, and a small Slovak contingent that marked the start of World War II in Europe...
, to administer the economic blockade of Germany, the British Ministry of Economic Warfare
Minister of Economic Warfare
The Minister of Economic Warfare was a British government position which existed during the Second World War. The minister was in charge of the Special Operations Executive.-Ministers of Economic Warfare 1939-1945:...
was established on September 3, 1939 By April 1940 Britain realized that blockade appeared not to be working because of "leaks" in blockade with two major "holes" at the Black Sea and Mediterranean provided by several neutrals countries, including Italy.
| Soviet Soviet Union The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991.... Union Soviet Union The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991.... |
Poland Poland Poland , officially the Republic of Poland , is a country in Central Europe bordered by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine, Belarus and Lithuania to the east; and the Baltic Sea and Kaliningrad Oblast, a Russian exclave, to the north... &Danzig |
Finland Finland Finland , officially the Republic of Finland, is a Nordic country situated in the Fennoscandian region of Northern Europe. It is bordered by Sweden in the west, Norway in the north and Russia in the east, while Estonia lies to its south across the Gulf of Finland.Around 5.4 million people reside... |
Estonia Estonia Estonia , officially the Republic of Estonia , is a state in the Baltic region of Northern Europe. It is bordered to the north by the Gulf of Finland, to the west by the Baltic Sea, to the south by Latvia , and to the east by Lake Peipsi and the Russian Federation . Across the Baltic Sea lies... |
Latvia Latvia Latvia , officially the Republic of Latvia , is a country in the Baltic region of Northern Europe. It is bordered to the north by Estonia , to the south by Lithuania , to the east by the Russian Federation , to the southeast by Belarus and shares maritime borders to the west with Sweden... |
Lithuania Lithuania Lithuania , officially the Republic of Lithuania is a country in Northern Europe, the biggest of the three Baltic states. It is situated along the southeastern shore of the Baltic Sea, whereby to the west lie Sweden and Denmark... |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1939 | 52.8 | 140.8 | 88.9 | 24.3 | 43.6 | 27.8 | ||||||
| *German Imports in millions of Reichsmarks | ||||||||||||
On September 17, the Red Army
Red Army
The Workers' and Peasants' Red Army started out as the Soviet Union's revolutionary communist combat groups during the Russian Civil War of 1918-1922. It grew into the national army of the Soviet Union. By the 1930s the Red Army was among the largest armies in history.The "Red Army" name refers to...
invaded eastern Poland and occupied the Polish territory
Soviet invasion of Poland
Soviet invasion of Poland can refer to:* the second phase of the Polish-Soviet War of 1920 when Soviet armies marched on Warsaw, Poland* Soviet invasion of Poland of 1939 when Soviet Union allied with Nazi Germany attacked Second Polish Republic...
which held up to 70 per cent of Poland's pre-war oil production.
In October three German trade partners - Baltic States
Baltic states
The term Baltic states refers to the Baltic territories which gained independence from the Russian Empire in the wake of World War I: primarily the contiguous trio of Estonia, Latvia, Lithuania ; Finland also fell within the scope of the term after initially gaining independence in the 1920s.The...
– Estonia
Estonia
Estonia , officially the Republic of Estonia , is a state in the Baltic region of Northern Europe. It is bordered to the north by the Gulf of Finland, to the west by the Baltic Sea, to the south by Latvia , and to the east by Lake Peipsi and the Russian Federation . Across the Baltic Sea lies...
, Latvia
Latvia
Latvia , officially the Republic of Latvia , is a country in the Baltic region of Northern Europe. It is bordered to the north by Estonia , to the south by Lithuania , to the east by the Russian Federation , to the southeast by Belarus and shares maritime borders to the west with Sweden...
, and Lithuania
Lithuania
Lithuania , officially the Republic of Lithuania is a country in Northern Europe, the biggest of the three Baltic states. It is situated along the southeastern shore of the Baltic Sea, whereby to the west lie Sweden and Denmark...
– were given no choice but to sign a so-called Pact of defense and mutual assistance which permitted the Soviet Union to station troops in them.
German-Soviet tensions were also raised by the Soviet invasion of Finland
Winter War
The Winter War was a military conflict between the Soviet Union and Finland. It began with a Soviet offensive on 30 November 1939 – three months after the start of World War II and the Soviet invasion of Poland – and ended on 13 March 1940 with the Moscow Peace Treaty...
started at November 1939. Several German merchant ships were damaged
Germany and the Soviet Union continued economic, military and political negotiations throughout the last half of 1939, which resulted in a much larger German–Soviet Commercial Agreement
German–Soviet Commercial Agreement (1940)
The 1940 German-Soviet Commercial Agreement was an economic arrangement between the Soviet Union and Nazi Germany signed on February 11, 1940 by which the Soviet Union agreed in period from February 11, 1940 to February 11, 1941, in addition to the deliveries...
was signed on February 11, 1940. Under that agreement, the Soviet Union became a major supplier of vital materials to Germany, including petroleum, manganese, copper, nickel, chrome, platinum, lumber and grain.
They also received considerable amounts of other vital raw materials, including manganese ore, along with the transit of one million tons of soybeans from Manchuria. On January 10, 1941, the countries signed an additional agreement
German–Soviet Border and Commercial Agreement
The German–Soviet Border and Commercial Agreement, signed on January 10, 1941, was a broad agreement settling border disputes and continuing raw materials and war machine trade between the Soviet Union and Nazi Germany...
modifying their 1940 commercial agreement, adjusting borders, and resolving other minor disputes.
- 1,600,000 tons of grains
- 900,000 tons of oil
- 200,000 tons of cotton
- 140,000 tons of manganese
- 200,000 tons of phosphates
- 20,000 tons of chrome ore
- 18,000 tons of rubber
- 100,000 tons of soybeans
- 500,000 tons of iron ores
- 300,000 tons of scrap metal and pig iron
- 2,000 kilograms of platinum
In August 1940, Soviet imports comprised over 50% of Germany's total overseas imports, which declined at this time to 20.4 thousands of tons.
The alliance ended when Germany began Operation Barbarossa
Operation Barbarossa
Operation Barbarossa was the code name for Germany's invasion of the Soviet Union during World War II that began on 22 June 1941. Over 4.5 million troops of the Axis powers invaded the USSR along a front., the largest invasion in the history of warfare...
and invaded the Soviet Union on June 22, 1941. The various items that the USSR has sent to Germany from 1939 to 1941 in significant amount, can be substituted or obtained by increased imports from other countries.
Without Soviet deliveries of these major items, Germany could barely have attacked the Soviet Union, let alone come close to victory, even with more intense rationing.
External links
- A Description of the agreement written 10 days after its signing by Dr. Karl Schnurre, Head of the Eastern European and Baltic Section of the Commercial Policy Division of the German Foreign Office.