After declining relations throughout the 1930s and then a flurry of negotiations in the summer of 1939, Germany (represented by Karl Schnurre) and the Soviet Union (represented by Yevgeny Babarin) signed a major economic agreement in Berlin in the early morning hours of August 20. The treaty called for 200 million Reichsmark in new orders and 240 million Reichsmark in new and current exports from both sides over the next two years.
This agreement served two purposes. First, it brought two complementary economies closer together. To support its war economy, Germany needed raw materials - oil, manganese, grains, and wood. The Soviet Union needed manufactured products - machines, tools, optical equipment, and weapons. Although the USSR had slightly more room to maneuver and a somewhat superior bargaining position, neither country had many options for receiving such materials elsewhere. Subsequent economic agreements in 1940 and 1941, therefore, focused on the same types of items.
Second, the economic negotiations provided a venue for these otherwise hostile powers to discuss political and military issues. Hitler and Stalin signaled each other throughout 1939 by means of these economic talks. Not surprisingly, therefore, the Nazi-Soviet Pact was signed a mere four days after the economic agreement.
Because raw materials took less time to produce, Soviet shipments initially outpaced German exports and provided an important prop to the German war economy in late 1940 and 1941. Before the Germans could fully live up to their end of the bargain, Hitler invaded.
Bibliography
Ericson, Edward E. (1999). Feeding the German Eagle: Soviet Economic Aid to Nazi Germany, 1933 - 1941. West-port, CT: Praeger.
—EDWARD E. ERICSON III
