How business helped foster relations between West Germany and USSR

After the capitulation of Nazi Germany, the victorious powers divided the vanquished country into occupation zones: Three fell under the control of Western countries, later forming West Germany (the FRG); while East Germany, the future GDR, entered the Soviet Union's sphere of influence.

Once the two different political blocs solidified, each went about strengthening ties with countries within their respective camps. Nevertheless, cooperation with countries on the other side of the ideological divide could bring mutual benefits and provide the potential for a normalization of the situation in the world. Despite political obstacles, the economy became an instrument for strengthening such ties. And West Germany’s business elite played a big role in the restoration of relations between Moscow and Bonn.

The first steps

Attempts to establish trade contacts had begun in the late 1940s. The international situation, however, was not conducive to this: Relations between the Soviet Union and the capitalist powers were tense. Despite this, there was trade on German territory and, as part of it, an exchange of goods and services was taking place between the Allied occupation zones. It was these contacts that could have constituted a means of access to the Eastern European market for West German companies.

However, this didn't happen owing to the USSR's imposition of a blockade of West Berlin on June 24, 1948. Moscow was dissatisfied with a currency reform that the other three victorious powers were carrying out in the so-called "Trizonia" under their control and blocked the de facto enclave's links with the outside world.

The attitude in West Germany whether or not to trade with socialist countries was ambivalent. On the one hand, "the political community in the FRG and the governments of the [Western] allied countries were deeply suspicious of dealings across bloc borders, even simple negotiations", noted Heinrich Vogel, a former director of the Federal Institute for Eastern and International Studies in Cologne.

Many members of the West German leadership were hostile towards Moscow. According to Russian expert on Germany Nikolai Pavlov, the first Federal Chancellor of the FRG, Konrad Adenauer (1949-1963), was an "ardent anti-communist" and advocate of a hard line towards the USSR, which embodied values opposite to his own.

The position of the U.S. also played a certain role. In 1951, the U.S. adopted the so-called Battle Act which imposed an embargo on the supply of "strategic" products to the Socialist Bloc countries and demanded that other states that wanted to receive economic, financial and military aid from Washington should maintain the same restrictions.

On the other hand, the West German authorities realized that economic cooperation with the Soviets was necessary. In May 1952, the Bundestag called for an increase in legalized trade between the West and the East (West-Osthandels) which might help ease tensions between West and East. Illegal trade with Eastern Europe already existed and heavily relied on consumer goods that would otherwise have had to be imported from Western countries for dollars that were anyway in short supply.

In the summer of the same year, a delegation of entrepreneurs from the FRG led by the chairman of the Rolled Steel Group (Walzstahl) of the Düsseldorf Iron and Steel Industry Association, Gerhard Bruns, arrived in Copenhagen for a secret meeting with Deputy Minister of Foreign Trade of the USSR Sergei Borisov. They reached an accord to draw up an agreement on the development of bilateral trade.

Six months later, at the initiative of FRG Minister of Economic Affairs Ludwig Erhard, the German Eastern Business Association (Ost-Ausschuss der Deutschen Wirtschaft) was formed. It was a body designed to bring together representatives of local business circles to support trade links with the USSR and the countries of the Council for Mutual Economic Assistance (Comecon).

Trade managed to get going from a standing start: While in 1951 trade turnover between the two countries was at zero, by 1954, according to Soviet statistics, it had climbed to almost 20 million rubles. A series of negotiations followed regarding the categories of goods that the countries could focus on, and plans were made for a trade agreement between the USSR and FRG. The process stalled in 1954, however, following the intervention of Adenauer and State Secretary at the FRG Foreign Office Walter Hallstein, and possibly U.S. officials.

Adenauer's visit to Moscow

In 1955, the USSR decided on a landmark political step: Via the FRG's Paris embassy, Adenauer was sent an invitation to visit Moscow. The aim of the talks was the normalization of relations between the two countries: A thaw had begun in the USSR under Nikita Khrushchev, and the Soviet leadership sensed a relative stability in the international situation. Calls for detente were being made by U.S. President Dwight Eisenhower, and so, with the approval of the victor-countries, the Chancellor accepted the invitation.

Adenauer believed, however, that economic cooperation with the USSR was not in the interests of the West since it would lead to the strengthening of an adversary. "As regards the economic and cultural issues tabled for discussion by the Russians, I decided to display a large measure of guardedness on this score. Economic matters could not under any circumstances be allowed to be given center stage in Moscow. This was of substantial political relevance for future negotiations with Moscow, and, anyway, economic negotiations with Russia should always and above all be seen by us from a political viewpoint," was how the chancellor described his thoughts regarding the forthcoming visit in his memoirs.

In the end, economic matters were pushed to the background at the Moscow talks, and both sides confined themselves to a joint communique, having agreed to discuss, in greater detail and at an early date, trade relations and the possibility of underpinning them with an appropriate agreement.

Diplomatic relations were established with the USSR. The adoption of the so-called "Hallstein Doctrine" by the West German authorities followed shortly afterwards, however. Bonn laid claim to sole representation of the German people on the international arena, while the exchange of ambassadors between East Germany and the USSR was automatically strengthening the status of the GDR. In consequence, the FRG adopted a doctrine proposed by German Foreign Office official Walter Hallstein. According to this principle, the FRG would cease diplomatic contacts with countries that maintained diplomatic relations with the GDR.

Strengthening trade ties

FRG industrialists were unhappy with the slow pace at which the strengthening of trade relations was proceeding. There was also concern that other Western countries were already actively pursuing links with the East at that time. It must be said that trade turnover between the USSR and West Germany was gradually on the rise all this time, reaching more than 512 million marks by 1956. By and large, however, imports into the FRG considerably exceeded exports, so from the financial point of view trade predominantly ran at a deficit.

Bonn only succeeded in achieving a positive trade balance with the USSR a handful of times in the 1950s-60s. In this period, the FRG already began to rank No. 1 among the Western European countries sending goods to the USSR, reaching the top slot in 1957. The Soviet Union sent equipment, oil, petroleum products, construction materials and grain, and, in smaller quantities, furs, tobacco, caviar and tinned crab. West Germany, in turn, sent machinery and equipment, rolled ferrous metals, pipes, copper, plastics and medicines in the other direction.

The Soviet side continued to seek opportunities for strengthening ties, and in 1957 diplomat Andrey Smirnov passed a letter to Adenauer from the head of the Khrushchev government, Nikolai Bulganin, that emphasized such a desire on Moscow's part. Otto Wolff von Amerongen, one of the participants in the Soviet-West German economic dialogue, who served as chairman of the Eastern Committee of FRG business circles from 1952 to 2000 and who was regarded as a "secret minister for Eastern trade", attached great significance to the letter.

In 1958, both sides reached an agreement on trade and payments turnover that set the ambitious target of increasing trade volumes to 1.2 billion marks by 1960. In the end, the goal was surpassed, and the agreement became the foundation of the economic cooperation of the two countries and kept their trade going during the Cold War despite being plagued by a number of diplomatic crises.

How business helped foster relations between West Germany and USSR

The first steps

Adenauer's visit to Moscow

Strengthening trade ties

READ MORE: How oil and gas improved relations between the USSR and West Germany