Iehc 2006 session 101

IEHC 2006

SESSION 101

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

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internal economic stability”

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. 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.

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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

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 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.

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 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.

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IEHC 2006

SESSION 101

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

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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).

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 Furthermore, in

December 1951 the government Committee for Systematic Limitation of Imports from

Capitalist States was set up.

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 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.

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 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.

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     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

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  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.

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  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.

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 Ibidem.

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  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.

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