Memorandum on the Status of German-Russian Negotiations
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No. 613



1. The conversations with the Soviet Trade Mission here regarding the extension through 1938 of the Economic Treaty for 1937 have thus far been fruitless. In 1937 the Russian obligations arising from bills that fell due during that year were paid before maturity by delivery of goods which were foreign exchange assets to us. We are prepared to grant the Russians the same settlement for 1938. The Russians, however, demand that the obligations on bills falling due in 1938 be paid by deliveries of goods of their choice. They therefore no longer intend to adhere to the lists of goods agreed upon for 1937 for the payment of these obligations. Regarding the amount, the problem for 1938 is of considerably less importance, since only obligations on bills in the amount of 12 million Reichs-marks will fall due, compared with 27 million Reichsmarks in 1937. Of these 12 million Reichsmarks, 7 million Reichsmarks are offset by foreign exchange obligations of the Potash Syndicate, so that only 5 million Reichsmarks would have to be paid by deliveries of raw materials. The question has, however, considerable fundamental importance, in relation to the later repayment by the Russians of the last 200-million credit.

2. In order to insure larger raw material imports from the Soviet Union in 1938 at the outset, we have requested that the Russians submit a list to us of those goods which they intend to order in Germany in 1938 and have promised them far-reaching concessions in supplying this list. According to the view of Minister President General Goring, we are even prepared to make further concessions in those fields where we have previously refused to make any. The Russian order list requested by us has not yet been submitted, and in view of the personnel difficulties can hardly be expected soon.

3. Among ourselves, i.e., thus far only within the delegation, we have considered whether the German raw material purchases from Russia could be expanded and put on a firm basis by means of a new credit. In this connection the following plan has been dis-cussed: proposing to the Russians that the last 200-million-Reichs-marks credit, which will not fall due until 1940 and later, be paid now, i.e., before maturity, by raw material deliveries, and making the payment of this credit palatable by granting another 200-million credit. We agreed today that Section Chief Spitta is to submit this idea as soon as possible to Minister President General Goring and to obtain his decision whether we can make such a proposal to the Russians.

Promises regarding the Russian orders in Germany and credit operations are the only two means of activating the question of raw material deliveries from Russia, since the Russians do not deliver one penny's worth more than is required for the payment of their orders and credit obligations. Whether the Russians will even consider our proposals cannot be foreseen at the present time. In this con-nection it is a disadvantage that the present Chief of the Trade Mission, Smolensky, hardly dares to express his own opinion and depends upon his Moscow superiors in everything. In Moscow itself the personnel relations in the Commissariat for Foreign Trade are completely unsettled.

BERLIN, January 10, 1938.


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