Iehc 2006 session 101

IEHC 2006

SESSION 101

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

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time of waging an “economic war” by legal means. The aim was to reduce the possibility of

buying weapons, strategic instrumentation, technologies and raw materials, either through

various forms of pressure on individual countries and exporters, or direct, normative

discrimination in mutual relations.

The leading role in organizing economic pressure on the USSR and its satellites on the

most important world markets (in the East it was called economic discrimination) was

assumed by the U.S., which for this purpose utilized wartime legislation (“Act Leading

Towards Strengthening National Defense” of July 2, 1940, updated in February 1949 in the

form of the “Export Control Act”). The “Mutual Defense Assistance Control Act” of October

26, 1951, adopted by the U.S. Senate, introduced the principle of control of relations in

economic relations with countries that represented a threat to U.S. security (including the

USSR and countries under its influence). Czechoslovak-American non-treaty relations (pre-

war provisions were declared invalid by the U.S.) did not change the fact that the CSR as a

member of GATT enjoyed most-favored nation status in the USA. At the GATT meeting the

U.S. declared that it accepted the cancellation of mutual treaty obligations between the U.S.

and Czechoslovakia, nonetheless Czechoslovakia continued to remain a GATT member and

enjoy its benefits towards other member countries. Mutual Czechoslovak-American trade thus

unfolded under very unfavorable conditions and the volume was considerably reduced.

Administrative barriers came to a head in October 1951 in connection with the so-called Oatis

spy case when the American consulate in Prague stopped confirming consular invoices

necessary to export all goods, from which customs duty was collected ad valorem (most

mutual trade commodities), and suspended their confirmation indefinitely, which in fact

meant the cancellation of exports of Czechoslovak goods to the U.S.

Also receiving its own organizational structure was control of economic relations with

the East within the framework of NATO. The Defense Finance and Economic Committee in

November 1949 created a so-called Consultative Group to exchange opinions and information

on relations with eastern countries, which resulted in the early 1950s in the well-known

Coordinating Committee – COCOM. Its extensive administrative apparatus with headquarters

in Paris resolved current issues of control of economic relations with the countries of the

Soviet bloc, issued and periodically renewed a list of banned goods and goods under

controlled export, and monitored compliance with the embargo on export of strategic types of

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IEHC 2006

SESSION 101

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

4

goods.

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 The list names individual kinds of goods according to their line of production, for

example in machine production the export of vertical drills, revolving lathes, hydraulic

presses etc. was banned, in the chemical industry substances to produce penicillin and

streptomycin could not be exported. Completely banned for export were technologically

demanding products of the electrical engineering industry such as calculating machines,

electron microscopes, radars etc. The lists included 200 items of raw materials, substances

and technical products.

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Without question the western embargo projected itself significantly into trade between

East and West in both its structure and volume. COCOM’s statistics show that the countries

of the Sino-Soviet bloc had a 4.1% share on Free-World Exports in 1947, 3.7% in 1948, 3%

in 1949, 2.7% in 1950, 2.2% in 1951, and as low as 1.9% in 1952 and 1953. In the following

years the East’s share on exports of countries with market economies rose only at a slow pace.

Also prominent was the decline of Free-World Imports with countries of the Sino-Soviet bloc,

which amounted to 2.7% in 1947, while two years later it reached its lowest, i.e. 2%. Absolute

figures do not even indicate such a radical fall in significance of trade with European satellites

of the USSR (see table in appendix 1), of course one must also take into account the fact that

the volume of international trade rose dramatically while trade with the USSR and its

satellites stagnated and even slightly fell.

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The temporary reduction of trade relations between the West and the European

countries of the Soviet bloc cannot be attributed only to American concentrated pressure. It is

a fact that trade with the West was limited also by those countries themselves. The main

slogan of the day became “for the countries that set out on the path to build socialism let’s

eliminate the economic-technical dependence on the capitalist economic system and achieve

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   For summary of Czechoslovak economic relations with USA and survey of their discrimination measures cf.

quoted work of Zden k Procházka, newly monography of Slavomír Michálek Nádeje a vytriezvenia

eskoslovensko-americké vz ahy v rokoch 1945 – 1951) [Hopes and growing sober. Czechoslovak-Ameri an

relations in the years 1945-1951, Bratislava: Veda 1995.

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 Economic discrimination of people´s democratic countries (information for the Prime Minister, August 1949),

Národní archiv v Praze (National Archives in Prague– further only NAP), Prime Minister Office – secret files

1945 – 1959 (further only PMO-S), carton 762, No. 1517/49; Report on attacs of imperialists against

Czechoslovak ekonomy and our measures, January 1950, NAP, Archives of the Central Committee of the

Communist Party of  Czechoslovakia (further only CC CPCz), General Secretary 1945 – 1951 (further only GS),

bundle 68, inventory no. 534; summary report on trades and payment relations wth USA and other dollar

territories, 11. 9. 1952, NAP, CC CPCz, Political Secretary of Central Committee 1951 – 1954 (further only PS

CC), bundle 39, inventory no. 115.

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  The 1958 Revision of East-West Trade Controls. Mutual Defence Assistance Act of 1951, Washington:

Department of State, Publication 6797, April 1959, p.  38.

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