IEHC 2006
SESSION 101
Cold War and Neutrality: East-West Economic Relations in Europe
5
internal economic stability”
6
. Eastern countries tried to carry out this task in several ways: by
changing the structure of the national economy and introducing its own production of various
technical machinery that admittedly did not have a great tradition in Eastern European
countries, by importing raw materials and substances from friendly countries, by developing
so-called socialist integration, by increasing domestic mining associated with accelerated
development of geological surveys of raw materials, by replacing raw materials and
substances traditionally imported from the West and now blocked by embargo with other raw
materials and substances that were more easily attainable. This process, which in hindsight
even the pro-regime literature recognized, worked in two directions. On the one hand the
development of progressive fields accelerated and increased domestic production of raw
materials, while on the other hand it naturally introduced long-term inefficient mining of ore
with low metal content and introduced inefficient small-scale production of technical
machines with relatively low technical-technological parameters.
7
The East faced problems stemming from the western embargo also in a way that was
not and could not be discussed in public. This involved imports of embargoed raw materials,
semi-finished goods and technical products, especially machines, which were not accessible
in the Eastern bloc and which were attainable from the West, namely via neutral countries. It
must also be said, as the following analysis will demonstrate, that this involved items
relatively wide-ranging and fundamentally important for the national economy of individual
countries and their economic stability. Trade with neutral countries therefore even became the
subject of clandestine events in the countries of the Eastern bloc. During the years 1949 –
1956 inclusive Czechoslovakia did not publish any official data on its foreign trade. In the
following years it did publish certain data retrospectively but the nature and extent of trade
with neutral states were of course missing in them.
Difficulties in economic relations with the West rose sharply during 1949. Liabilities
of Czechoslovak foreign trade rose in relation to countries with valuable currencies. As a
result, foreign currency was lacking to import raw materials essential for Czechoslovak
industry. To improve the situation, further organizational measures were introduced. The
6
Zden k Šedivý, Nezávislost našeho hospodá ství na dovozu z kapitalistických stát [Independendence of our
economy on imports from capitalistic states], in: Zahrani ní obchod [Foreign Trade], volume VI (1951), no. 26,
s. 410 – 414; Principles of Czechoslovak foreign trade development with capitalistic countries, material of
Czechoslovak Foreign Trade Office, 26. 2. 1957, no. 011635/1957, NAP, Ministry of Foreign Trade 1945 – 1968
(further only MFT), secret files – 1957, carton 50, inventory no. 360.
7
Cf. Rudolf Olšovský – Václav Pr cha – Zora Urbanová, Stru né d jiny sv tového hospodá ství [History of
World Economy in Outline], Praha: Státní pedagogické nakladatelství 1978, p. 500.
IEHC 2006
SESSION 101
Cold War and Neutrality: East-West Economic Relations in Europe
6
government stated that regulations on savings of deficit materials did not bring about the
expected effect, and planned consumption of these materials
were exceeding the import
possibilities of the Czechoslovak economy. Internal analyses suggested that the state of
reserves of deficit materials was not precisely known and only rough estimates were used.
Inspections at companies indicated waste. For this reason the central Committee for Savings
of Deficit Raw Materials was established in July 1951 with branch offices at individual
departmental ministries. The committee expected vast savings as a result of its operations
(40% of copper and lead, 30% of aluminum and nickel, 10% of zinc and tin).
8
Furthermore, in
December 1951 the government Committee for Systematic Limitation of Imports from
Capitalist States was set up.
9
The effectiveness of both committees was limited, although
statistically it did not look entirely bad. For example, for 1953 the Committee calculated
unexpected savings of 676 mil. CZK while real savings were more than one half less: 274 mil.
CZK.
10
This was approximately 4% of the total volume of Czechoslovak imports in the above
year. However, despite the complex of effective measures the
situation did not improve
fundamentally. In September 1952 the Czechoslovak government even had to take the
extreme step of reducing state reserves of gold deposited as currency reserves in the State
Bank of Czechoslovakia by 500 mil. CZK, which was used to buy deficit non-ferrous metals
on western markets.
11
Economic reality soon showed – in spite of a great success in area of raw materials
(see graph in appendix 2) – that reducing dependence on western markets would not be easy
or quickly feasible. Trade relations with the West appeared to be indispensable, and the
concept of limiting foreign trade with the West even became one of the themes of fabricated
political trials. In the trials with deputy ministers of foreign trade Rudolf Margolius and
Eugen Löbl, on the one hand their “sabotage activity” should have sought to tie the
Czechoslovak Republic (hereinafter referred to as SR) to the system of capitalist states,
especially the USA, while on the other hand of course in these same trails it was said that
“under the pretext of strengthening independence from capitalist states the impression was
8
Report of the Board for Deficit Raw Materials Saving on the prepared measures, 16. 7. 1951, NAP, CC CPC ,
PS CC, bundle 4, inventory no. 47.
9
First report on the work of the Expert Comission for imports limiting from capitalistic states, 2. 5. 1952, third
report of the same commission, 25. 2. 1953, NAP, PMO – secret files, carton 94, no. 3445/1952 and no.
4195/1953.
10
Ibidem.
11
Proposal of the finance minister Jaroslav Kabeš to reduce gold reserves sent to Economic Council of the
Central Committee of the Communist Party, 5. 9. 1952, NAP, CC CPCz, Economic Council of the Central
Commettee of the Communist Party of Czechoslovakia 1948 – 1951 (further only EC CC CPCz), bundle 28,
inventory no. 241.