661.6231/193: Telegram
The Chargé in the Soviet Union (Kirk) to the Secretary of State
[Received February 20—6:10 a.m.]
79. A member of the German Embassy here has furnished in strict confidence and with urgent recommendations as to secrecy the following.
Upon the failure of Schnurre to reach Moscow negotiations in regard to the commercial agreement between Germany and Soviet Union have recently taken place between the German Ambassador here and the Soviet Commissar for Foreign Trade66 and within the last few days a virtual agreement with a few unimportant exceptions has been reached between them. According to this information which was characterized as preliminary the accord will consist of the following two agreements.
[Page 317]1. An agreement regulating trade between the two countries on a basis of parity between exports and imports whereby the Soviet Union will purchase in Germany machinery and equipment other than those clearly for military purposes and will sell to that country an amount equal in value of some 15 categories of raw materials including timber, mostly pulp logs, manganese ore, flax, cotton and small quantities of iron and oil. It is expected that timber will constitute approximately 45% of the total value of Soviet goods to be sold to Germany. Payments under this agreement will be effected through a clearing arrangement in German marks. Exact information as to the amounts involved are not available, it is believed that the total turnover under this agreement between the two countries may equal in the neighborhood of 200 million marks.
It is proposed that the above agreement will run for 5 years, although this point is not yet definitely settled.
2. A separate agreement involving the extension of credits to the Soviet Union for additional purchases in Germany, guaranteed 100% by the German Government of approximately 200 million reichsmarks. This credit will run for a period stated to be slightly under 10 years. The Soviet Government will not be required to expend a minimum amount of the credit per year. It cannot be utilized for the purchase of military equipment.
Although the German Embassy here insists that no strictly military equipment or supplies will be sold to the Soviet Union under the above agreements it is admitted that certain types of implements susceptible of military use such as optical instruments may be included.
The German Commercial Counselor here planned to leave for Warsaw last night to consult with Schnurre, who is in that city in connection with commercial negotiations with Poland and the Counselor is expected to return to Moscow on February 22nd. The German Embassy here states that unless objections are raised in Berlin the two agreements between the Union of Socialist Soviet Republics and Germany may possibly be signed in Moscow within 10 days or 2 weeks. Although the German Embassy here persists in maintaining that the foregoing agreement is without political significance, it is impossible in the present circumstances to ignore the fact that within a brief period of time Italy and Germany have been proceeding with the negotiation of commercial agreements with the Soviet Union and that, in view of the antagonism which has characterized the relations between the Soviet Government and the Governments of those countries, the conclusion of accords even of a commercial nature can scarcely be divorced in thought from considerations involving possible political implications. In any event even on the basis of the commercial aspects of the agreements in question any improvements in trade resulting from those agreements would in themselves tend to exert a modifying influence on the course of the relations between the contracting parties.
- Anastas Ivanovich Mikoyan.↩