Iehc 2006 session 101

IEHC 2006

SESSION 101

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

15

However, the import of goods embargoed by the USA and their allies started to get

complicated even in relation to Switzerland. During the negotiations about the quota lists in

Prague, the Minister Max Troendle stated that the USA requested that Switzerland should also

introduce an embargo, which was rejected in Bern, and no embargo document was signed and

Switzerland would "maintain its neutral position". Nevertheless, he stated that Switzerland

was dependent on the import of actually all kinds of raw materials and if it wanted to import

them, it would have no other choice than  - in those cases where it is explicitly requested that

the goods should remain in Switzerland – to comply with this request and even check on

whether these conditions were being complied with.

35

 Czechoslovakia really started to

experience a lower degree of tolerance on the part of Swiss authorities when trading in

"sensitive goods". Prague countered this by improved organization of its activities, partly

legal, partly semi-legal or even illegal ones.

In July 1951, the Ministry of Foreign Trade set up a special coordination group in

Bern for trade in embargoed goods. This group was made responsible for carrying out and

organizing this trade and it consisted of the employees of the Embassy and the representatives

of some privileged foreign trade enterprises (Metalimex, Kovo, Chemapol, Keramika,

Investa). Its terms of reference included confidential cooperation with certain companies, to

which money was entrusted confidentially and which procured the necessary goods "on their

own account" for certain commission fees. The group organized purchase of non-ferrous and

precious metals, special apparatuses, spare parts for aircrafts and automobiles as well as

industrial diamonds. Over the first 18 months of its existence, the turnover of the trade

ensured by this group reached the amount of 39 million USD.

36

 The members of the group

were ensuring receipt of the goods, insurance of the goods, banking and transport links as well

as complaints. The requests for the goods, which were to be purchased, were sent by

encrypted messages or in the form of order in claris verbis included in sealed diplomatic

messenger mail, to which the exterritorial status of a diplomatic mission applied. Some small-

sized commodities such as diamonds, platinum resistance spirals, etc. were even transported

by messenger mail to the Czechoslovak Republic. The cooperating companies included larger

enterprises as well as quite small enterprises, which based their existence on this trade (such

35

 Record of Rudolf Margolius, 16. 3. 1951, ibidem.

36

 Confidential report of Czechoslovak embassy in Bern on the work if the group sent to minister of foreign trade

Radek Dvo ák, NAP, MFT, Territorial departments 1945-1970, Switzerland 1952, uninventoried materials, no.

j. 30731/1952.

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IEHC 2006

SESSION 101

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

16

as the SAVE company).

37

 These companies used to be referred to as the companies of

"faithful hand" in Prague because these companies were entrusted high financial amounts

without any guarantee.

38

The special group was also ensuring transit from third countries. Raw diamonds were

purchased in the Federal Republic of Germany, the diamond crowns were purchased in

Belgium and the United Kingdom. The volumes of some strategic imports of raw materials

and embargoed technical commodities such as American parts for the aircrafts of

Czechoslovak Airlines (purchased in Belgium),

39

 were constantly growing and it was hardly

possible to keep them secret. Managing the funds was becoming an increasingly big problem

because the amounts involved were not small. For example, in January and February 1952

alone, the Kovo foreign trade enterprise imported embargoed goods worth 1.126 million

Swiss Francs,

40

 and the Investa enterprise imported goods worth 0.206 million Swiss Francs.

The money was paid in cash by the responsible member of the mission to some of the

business partners. In part they were transported to Switzerland – like the orders for the goods

– via diplomatic messenger mail and, in part, cheques endorsed by the Czechoslovak State

Bank and Swiss banks were issued to the business partners. The methods of remitting the

money were being constantly changed because the transactions involved fairly high amounts,

which might have drawn attention.

41

In spring 1952, the USA increased their pressure on Switzerland. They blocked the

dollar deposits of Swiss banks. Banks were reproached for the transactions with the East,

especially with North Korea and China. The deposits were soon released but from then on the

banks refused to carry out operations related to transit trade and trade in raw materials. In

August 1952, a representative of the management of Union de Banques Suisses notified the

Czechoslovak trade representative that from then on he would have to use the services of a

Swiss post office or would have to collect the cheques sent to the bank in cash because the

bank would not issue any cheques on his name or on the name of the Embassy.

42

 The clients

of the banks had to sign a sort of declaration of "non-infection" when carrying out transfers of

37

 Confidential report of Czechoslovak embassy in Bern to MFT,  27. 2. 1952, ibidem, No. 21277/52.

38

 Cf. footnote 35.

39

 See Libor Zeman, Czech Airlines for 80 years at home in the skies, Prague:  SA a.s. 2003, p. 64. Components

bought swiss middlemans for Czechoslovakia in Belgium.

40

  Cf. footnote 36.

41

  Letter  of  MFT  to  Czechoslovak  State  Bank,    5.  7.  1951,  NAP,  MFT,  Secretariate  of    Dr.  Margolius,

Switzerland 1951, uninventoried materials, carton 17, no. 550/1951.

42

 Letter of trades attaché in Bern to firm Metalimex, 30. 8. 1952, NAP, MFT, Secretariate of viceminister 1945-

1954, Switzerland II, uninventoried materials, no. 30524/52.

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