Iehc 2006 session 101

IEHC 2006

SESSION 101

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

13

both countries promised, in Article 3, to apply a benevolent approach to the import and export

of the goods, which were not contained in the quota lists.

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The agreement was a compromise for both parties. However, in those difficult times, it

provided Czechoslovakia with the necessary deliveries of raw materials and mechanical

engineering products, which represented 65% of the goods in the lists of goods.

Czechoslovakia expected a reduction of the trade exchange as concerned the products referred

to as non-essential products. The volume of the goods within the quotas amounted to 2.9

billion Czechoslovak Crowns for both export and import. In addition to that, Czechoslovakia

obtained two interest-free loans, specifically a marginal credit in the amount of 115 million

Czechoslovak Crowns and an investment loan from Swiss banks in the amount of 345 million

Czechoslovak Crowns. The business practice applied up until that point became significantly

different from then on. The share of reciprocal trade transactions agreed at the level of major

enterprises was growing.

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The Czechoslovak efforts to strengthen the relations with Switzerland were also

expressed by a project of what was referred to as triangle trade, which was agreed in March

1950.

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 Triangle trade was a purposeful trilateral exchange of goods and it usually took on the

form of barter trade and it was not completely exceptional in the Czechoslovak post-war trade

practice. The advantage of these transactions was that it involved bartering goods, which were

not covered by an valuable currency but only by goods and, in this case, by the goods of a

third partner, i.e. by the goods, which were not available to Czechoslovakia. Thus, triangle

trade was regarded as a means of improving the foreign currency balance because triangle

trade was used to import goods, which otherwise – in a bilateral trade – would draw on

valuable currency. In combination with the nationalized Czechoslovak trading party and

Sulzer, a Swiss company, the nationalized Polish trading party became the third party of the

triangle trade. The contents of the agreement are shown in the table and diagram contained in

Annex 9. It provided Czechoslovakia with coal and zinc worth ca 11 million Swiss Francs.

Negotiating a triangle trade transaction was very demanding; the negotiations were extremely

tough, even in the Czechoslovak-Polish relations. Although more such transactions with the

29

 Czechoslovak agreements – Switzerland, 22. 12. 1949, NAP, fond MFT, secret fines, bunde 6, uninventoried

materials, sine; Rational report on the trade agreement with Switzerland,  22. 12. 1949, NAP, PMO,

uninventorised materials, resolutions, no. V/70/9/1949.

30

 Reciprocal trade transactions under the trade-political agreement from 30. 12. 1949, MFT, Territorial

depatments 1945 – 1970, Switzerland, karton 129, no. 218 470/49.

31

 Information for minister of foreign trade Antonín Gregor no. 70 concerning the final protocol of tripartite

negotiations,  23. 3. 1950, NAP, MFT, Secretariate of  Dr. Margolius 1951, karton 26, sine.

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IEHC 2006

SESSION 101

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

14

participation of the Sulzer company were planned, this project was eventually the first and at

the same time the last one. The possibilities of bartering goods were narrowing down.

Although the agreed quotas envisioned export from the Czechoslovak Republic worth

125 million Swiss Francs in the 1

st

 quarter of 1950, the actual export only reached 25.5

million and the efforts to increase it were unsuccessful. There were several causes of the

decline. Let us remind the depression in the Swiss market and the emergence of German

competitors, combined with legal insecurity caused by the espionage scandal involving

employees of the CIBA company and their conviction. However, the main causes of the

decline lied with the Czechoslovak party: the quality and price of the Czechoslovak goods,

lengthy execution of orders, unwillingness of Prague to export some "hard" commodities,

which the Czechoslovak Republic itself needed (coal, coke, cast iron, etc.).

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 In import, the

Czechoslovakia drew on the agreed quotas more than unevenly. While the quotas for the

necessary goods of investment nature were exceeded, the quotas for consumer goods and food

were used to a level of 20-70% (variously in different categories of goods). Switzerland

sought to make the level of drawing on the quotas even. In early summer, a sharp dispute

broke out over Czechoslovakian import of textile from Switzerland, which was not carried

out, and Switzerland stopped importing textile from Czechoslovakia.

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Through mutual compromises, the dispute was successfully settled. The negotiations

of a mixed Czechoslovak-Swiss commission, which held a meeting in Prague from

8 February to 19 March 1951, renewed the quota lists. It was planned that the Czechoslovak

import would amount to 1.04 billion Czechoslovak Crowns and that export would amount to

1.11 billion Czechoslovak Crowns. The lists of goods becoming effective on 1 April 1951

satisfied Prague only partially. Prague succeeded in ensuring the necessary quantity of

investment goods, aluminum, coloring agents, chemicals, medicines but did not succeed in

ensuring the planned quantities of ball bearings, industrial diamonds and non-ferrous metals.

Nevertheless, Prague considered the results of the negotiations, which had taken place under

"a strong pressure by the USA on the Swiss government", to be fairly good. Prague intended

to import the missing raw materials not directly from Switzerland but from third countries by

means of transit through Switzerland.

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32

 Information for the Prime Minister Viliam Široký, 11.5.1950, NAP, PMO, carton 1395, Protocols concerning

regulation of some financial questions between Czechoslovakia and Switzerland (1407/C/10), no. 202803/50;

Ch. Späti, o. c., p. 247-250.

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 Ch. Späti, o. c., p. 234-243, 246.

34

 Report on negotiations of mixed commission and signing of protocol from 15. 6. 1951, NAP, MFT,

Secretariate of  Dr. Margolius, Switzerland 1951, uninventoried materials , carton 17, sine.

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