Iehc 2006 session 101

IEHC 2006

SESSION 101

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

23

for trading goods not included in the quota lists by means of barter.

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 The implementation of

trade with Sweden was so important that Prague was willing to release valuable currencies to

ensure this trade; the transactions were covered by British Pound.

In 1951, the negotiating position of Czechoslovakia in relation to Sweden continued to

weaken significantly. The negotiations in Stockholm, concluded on 16 March 1951, were

taking place in an extremely deteriorated international situation, characterized by the growing

pressure of the USA on the Eastern Block countries, especially on Czechoslovakia, as well as

on those Western European countries, which maintained extensive trade relations with them,

i.e. on Sweden, among others. Prague was worried that if the agreement were not quickly

signed, it would not be signed at all. Czechoslovak concessions were far-reaching. The

volume of quota-based goods was decreased to 2.11 billion Czechoslovak Crowns, of which

1.1 billion Czechoslovak Crowns was allocated to Czechoslovak import, which meant that the

Czechoslovak import was to exceed the Czechoslovak export. On the import side, the

quantities of commodities described as "non-essential" and "undesirable" for Prague (milking

machines, washing machines, vacuum cleaners, milk powder, electric kitchen appliances)

were increased and there was also a growing pressure on the export of scarce domestic

consumer goods, the production of which was reduced as a result of lack of investments and

production capacities transferred to heavy industry and which were requested by Sweden. The

Swedish party took advantage of its favorable negotiating position in settling the problematic

financial issues. Czechoslovakia agreed to pay compensation to MUSTAD, a Swedish

company, for its daughter company Ocelá ský pr mysl a.s. (Steel Industry, Inc.). The one-

year term of the trade agreement remained unchanged. However, the main import interests of

Czechoslovakia were secured successfully.

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The protocol governing the trade for the period from 1 March 1952 to 28 February

1952 was signed in Prague on 14 March 1952. Czechoslovakia signed it again under the

pressure of the current situation, which was not developing favorably for Czechoslovakia. The

volume of quota-based lists dropped down to 2.5 billion Czechoslovak Crowns, with 1.19

billion Czechoslovak Crowns having been allocated to Czechoslovak import and 1.32 billion

to Czechoslovak export. The situation resulted in deterioration of the terms and conditions as

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  Rational report about prolonging of trade and payment agreement, 17. 4. 1951, ibidem, sine; Proposal of MFT

to approve the results of economic-political negotiations sent to CC CPCz,  NAP, CC CPCz, GS 1945-1951,

bundle 64, no. 520.

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 The rational report on the renewal of the payment and trade agreement of 16 April 1951, ibid., sine; a proposal

by the Ministry of Foreign Trade for approval of the results of trade-political negotiations with Sweden, 17. 4.

1951, NAP, CC CPCz, GS 1945-1951, bundle 64, no. 520.

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IEHC 2006

SESSION 101

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

24

well as the scope of trade. Although the Czechoslovak Republic decreased its demands for

iron ores and bearings, it did not succeed in achieving the desired quotas. In addition to that,

unfavorable price obligations were accepted (coke was delivered at the price of Westphal

coke and sugar was delivered at the current international price; the quota for the Swedish

consumer goods was increased). The report by the Ministry of Foreign Trade for the Central

Committee of the Community Party of Czechoslovakia stated: "The main reason why we have

been compelled to enter into this agreement, which is disadvantageous in comparison with the

previous agreements, is our dependency on the Swedish special ore necessary for the "frisch"

method. Up until now, we have been largely meeting our need for these special ores by the

ores from Sweden. Swedes are aware of their nearly monopoly position in relation to the

Czechoslovak Republic and they take advantage of it by systematically stepping up their

demands year by year. However, Swedes are taking advantage of their monopoly position in

iron ore in relation to some other European states, too. […] Under these circumstances, unlike

previous years, Swedes did not accept sugar as the economic counterweight of iron ores.

Therefore, in order to secure even this minimum quantity of special ores necessary for the

"frisch" method

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 (180,000 tons), we had no other choice but to accept the worsened structure

of the agreement and to accept the other stated obligations. […] If we remain dependent on

the import of the special Sweden ores necessary for the "frisch" method, it needs to be

expected that in the future, the Swedish demands will be further stepped up and the structure

will get worse."

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The economic negotiations in 1953 were extremely tough. The negotiations about

property-related and financial issues (including the outstanding compensation claims arising

from nationalization) as well as the trade-political negotiations resulted in a collapse. The

Swedish delegation again wanted to worsen the ratio of what was referred to as heavy and

light goods and wanted to reduce the requested quantities of the hard types of commodities,

i.e. ores, refined steels, accumulator material, etc. In addition to that, Sweden requested that

the Czechoslovak clearing debt amounting to 18 million Swedish Crowns, which had resulted

from the Swedish "intentional failure to receive" Czechoslovak sugar and rolled material, be

settled in valuable currencies.

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 After the Czechoslovak monetary reform carried out in May

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 "Frisch" method is a method of producing iron with a low phosphorus content.

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   Report on signing of trade agreement with Sweden for the period  1952-1953,  20. 3. 1952, NAP, CC CPCz,

Political secretariate, bunde 19, no. 87, p. 3.

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 The passive balance of payments was, among other things, an issue in the political trial with Rudolf Slánský,

the former General Secretary of the Central Committee of the Community Party of Czechoslovakia. Official

documents stated that the passive balance was not only a result of the unfavourable situation in the Swedish

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