Iehc 2006 session 101

IEHC 2006

SESSION 101

Cold War and Neutrality: East-West Economic Relations in Europe

19

Swedish might stop the deliveries of ores. This would have been very unpleasant because in

1948 half of the Czechoslovak need for iron ore was being met by the import from Sweden.

49

The intergovernmental agreement on regulation of trade relations signed in its final

version on 17 November 1945 in Stockholm was a quota-based agreement. Its annex defined

the maximum volumes of goods permitted by both parties to be exported. The permitting

procedure was a subject of polemic discussions and the Czechoslovak party made major

concessions to Sweden in this respect. The agreement was considered to be a provisional one

and it was to be in effect only until 1 July 1946. However, it was planned that after that date,

it would remain in effect automatically, unless it were replaced by a new agreement or unless

it were terminated by either of the parties after one-month prior notice. Under this agreement

(Article 4), the governments set up a mixed commission, which was to oversee the

performance of the agreement and which was to serve as a forum to facilitate and "fine-tune"

mutual relations.

50

 The trade agreement was supplemented by a special payment agreement

signed on the same date. This agreement introduced the clearing method into mutual relations.

The summary accounts were administrated by the Czechoslovak National Bank and by

Sveriges Riksbank. In order to speed up the Swedish deliveries, the Swedish government

provided a trade loan in the amount of 24 million Swedish Crowns (at a 3% interest rate).

51

The validity of the agreement was subject to similar stipulations applicable to the preceding

trade agreement.

The said agreements were labeled as confidential and therefore were not to be made

public. The Czechoslovak import list contained iron ores, ball bearings and roller bearings,

metal alloys, special steels, machines and tools, chemical and pharmaceutical products,

measuring and computing devices. An accumulator material was of special importance. The

Swedish list contained coke, iron, hops, machines, chemical and pharmaceutical products,

magnesite, electrotechnical installation material, porcelain and glass.

The trade relations governed by the agreement were developing very well. Over a

period of 6 months in 1946, goods worth 296 million Czechoslovak Crowns were imported

from Sweden and goods worth 309 million Czechoslovak Crowns were exported to Sweden –

thus, Czechoslovakia had a slightly active balance of trade. The consolidation and growth of

trade relations lead to negotiations of trade delegations, held in July of the same year. The

49

 See summarising material obout  First five-years plan, NAP, State Planing Office, part II 1949 – 1959, carton

335, no. 51.734/53.

50

 Agreement with rational report, NAP, MFT, Territorial departments odbor 1945 – 1970, Sweden 1945 – 1952,

uninventoried materials, bundle 127, sine; also  NAP, fond PMO, carton  1129, no. 1095/1945.

51

 Ibidem.

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IEHC 2006

SESSION 101

Cold War and Neutrality: East-West Economic Relations in Europe

20

negotiations resulted in a Protocol on extension of the 1945 trade agreement by 12  months.

Similarly, the term of the payment agreement was extended. The result of the new situation

was a significant extension of the range of exchanged goods. In the Czechoslovak import, the

quantities of food, especially salted fish, increased, while in the Czechoslovak export, the

quantities of hops, textile, ready-made clothes and hats increased.

52

Until 1947, the scope of trade relations was steadily growing. The Sweden's share in

the total Czechoslovak foreign trade reached its peak level (2.9%). However, the Swedish

trade with Czechoslovakia as well as the Swedish foreign trade as a whole fell into a deep

passive balance. Therefore Sweden decided to introduce a strict permission procedure for its

import.

53

 This fact had an unfavorable effect on the subsequent negotiations on the renewal of

the agreement, started with a delay in Stockholm on 7 July 1947. The originally fairly smooth

negotiations were becoming complicated. Sweden resisted the import of Czechoslovak

consumer goods. The negotiations were interrupted and, after a two-month pause, continued

in Prague. The negotiations were concluded on 30 October 1947. The resulting protocol

extended the term of the agreement of November 1945 by another year (i.e. until 31 October

1948). The scope of the quota-based agreements included the expected exchange of goods

worth around 24 million Swedish Crowns (i.e. 3,360,000,000 Czechoslovak Crowns).

Czechoslovakia was compelled to give up a number of its exports and had difficulties with

securing funds for the strategically important Swedish imports, which, besides iron ore,

included ball bearings, metal alloys and special steels. The Czechoslovak party had to make

concessions particularly in the export of shoes, porcelain, textile and glass. The payment

agreement continued to be based on a clearing system, managed in Swedish Crowns. A new

marginal credit was defined, which only amounted to 12 million Swedish Crowns

(i.e. 167 million Czechoslovak Crowns) from then on. In excess of this limit, it was necessary

to pay directly in gold or in foreign currency. In a special interpretation letter, it was provided

that this was a credit to be used to bridge the time differences between the deliveries of the

two countries and that it was not to be misused as a permanent credit.

54

However, Sweden was the country that got into the position of debtor and the mixed

commission held a meeting in Stockholm on 17 March 1948 where it discussed the settlement

of the amount of 1 million Swedish Crowns, by which the marginal credit had been exceeded.

52

 Protocol on trade relations, 29. 7. 1946, NAP, MFT, Territorial departments 1945-1970, Sweden 1945-1952,

uninventoried materials, bunde 127, sine.

53

 MFT report concerning economic-political negotiations with Sweden sent to PMO, 17. 9. 1947, NAP, PMO,

carton 1129, no. 1644/d v.-1947.

54

 Ibidem, no. 215 554/47.

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