Roger Moorhouse - The Devils' Alliance - Hitler's Pact with Stalin, 1939-1941

THE IDEA OF ECONOMIC COOPERATION AND TRADE BETWEEN GERMANY and Russia was nothing new, of course. Indeed, the two were remarkably well suited economically, with raw-material-rich Russia, keen to industrialize, a natural complement to the industrial powerhouse of Germany, ever hungry for raw materials. Since the late nineteenth century, German industrialists had been mesmerized by the prospect of tapping into Russia’s vast mineral resources, while Russia’s leaders had long sought outside technological help for their own industrialization drive. Hence, many on both sides foresaw a mutually beneficial arrangement beckoning if the political hurdles could be overcome.

The relationship had stuttered somewhat in the ideologically charged atmosphere after World War I, but the two countries had maintained economic relations, of sorts, throughout the interwar period, which had blossomed into full-blown collaboration when political and strategic circumstances had aligned. One such blossoming occurred in 1922, when Germany and Soviet Russia shocked the world by concluding the Treaty of Rapallo. With both states effectively excluded from the “community of nations”—one as a discredited ex-enemy, the other as a feared revolutionary—the two pariahs found common ground for a strategic and economic arrangement. Rapallo caused consternation in Allied capitals, but its wider significance has been rather exaggerated. It was as much a symbolic gesture—a joint thumbing of the nose at London and Paris—as it was an expression of practical policy. It was neither a formal alliance, nor a declaration of neutrality, nor a nonaggression pact. Rather it was a marriage of strategic convenience, a temporary expedient in a hostile world, that was intended as much to impress other potential suitors as to signify a genuine meeting of minds. As Churchill noted at the time, Russia and Germany merely shared a “comradeship in misfortune.”

Consequently, Rapallo’s political terms were rather conventional: the two signatories agreed to renounce all mutual territorial and financial claims and to normalize their diplomatic relations with one another. Its economic aspect, however, was more eye-catching, with both sides granting most favored nation status to each other and promising mutual cooperation in meeting their economic needs. The follow-up Treaty of Berlin of 1926 went further, extending a 300 million reichsmarks (RM) credit facility to the Soviet Union, backed by German banks. Although forged in a moment of political adversity, the German-Soviet relationship proved remarkably resilient, lasting into the early 1930s, long after the strategic rationale that spawned it had disappeared. Indeed, by 1932, the Soviet Union was taking 47 percent of her imports from Germany—the same percentage as in 1914—and receiving fully 72 percent of her machinery imports from German firms.

With Hitler’s rise to power in January 1933, the relationship with the USSR naturally began to change. Hitler had made his career out of baiting the Bolsheviks abroad and German communists at home; yet he did not hurry to kill off the relationship immediately and even renewed the Treaty of Berlin with Moscow in May 1933. In truth, however, and quite aside from ideological concerns, the economic relationship with the Soviet Union no longer served German interests as clearly as it had a decade earlier, and so it was allowed to wither. For one thing, Hitler had made a strategic decision to prioritize autarky and began reorienting German industry away from exports and toward domestic production for rearmament and infrastructure. For another, the relationship with the Soviets was seen as much less vital from the German perspective, especially as barely 6 percent of German imports came from the Soviet Union while only 10 percent of German exports went in the other direction, and those exports had to be funded by a raft of complex credit and loan agreements. While Germany had more reliable economic partners elsewhere, trading with the Soviets was scarcely worth the effort.

Yet, though the political relationship between Moscow and Berlin descended into rancor in the mid-1930s, the economic connection was nonetheless kept alive. The head of the Soviet trade mission to Berlin, David Kandelaki, arranged a number of meetings with Hitler’s minister of economics, Hjalmar Schacht, in 1935 and 1936, in which he not only argued for a rejuvenation of the German-Soviet economic relationship but also unsuccessfully floated the idea of a general normalization of relations between the two countries. Well-connected and a Georgian like Stalin, Kandelaki was certainly no maverick; it has been suggested that he acted as Stalin’s own special envoy, seeking to bypass traditional diplomatic channels to build bridges between Moscow and Berlin. Doomed to failure by the prevailing political winds, however, he was recalled to Moscow in April 1937, where he would share the grim fate of many of his fellows. Arrested in September of that year in the Great Purge, Kandelaki would be executed in July 1938. Ironically, it was almost certainly his contacts in Berlin that spelled his end.

Kandelaki was not alone in his ambitions, and despite his earlier failure, a few in German diplomatic and government circles—sometimes referred to as “Easterners”—were persistent advocates of a political and economic arrangement with the Soviet Union. One of these was Karl Schnurre, a diplomat and legal expert who from 1936 was head of the Eastern European Economic Section of the German Foreign Office. Schnurre maintained—as did a number of others, such as the German ambassador in Moscow, Friedrich-Werner von der Schulenburg—that supplies of Soviet raw materials were of such vital importance to Germany’s continued economic health that she should be willing to put up with the attendant irritations and even make substantial political concessions to secure them.

Schnurre was certainly not wrong. Germany by 1939 was still broadly dependent on imports for almost all her raw materials: 80 percent of her rubber, 60 percent of her oil, 60 percent of her iron ore, and 100 percent of her chrome and manganese had to be imported. The Soviet Union, meanwhile, was the world’s largest producer of manganese, the second-place holder in chrome production, and the third largest source of crude oil and iron ore. Clearly, as many among the Easterners had maintained, Nazi Germany and the Soviet Union were a very good fit economically—if only the political antipathies could be assuaged.

The primary difficulty for Schnurre was that—for the early part of his work, at least—he was very much swimming against the tide, advocating a practical economic arrangement when the ruling elites of both states were too busy fulminating against each other to contemplate any collaboration. Like Kandelaki before him, Schnurre found that as long as the political benefits of mutual antipathy outweighed the economic benefits of cooperation, he would find little purchase for his arguments.

By 1939, however, the political constellation was beginning to shift. Frustrated by what he perceived as Western “meddling” at Munich in September 1938 and alarmed by reports of growing Anglo-French rearmament, Hitler increased the pace of his strategic planning. At home, this meant a renewed focus on an already burgeoning armaments sector. Since 1933 military-related production in Germany had risen from 1 percent of gross domestic product (GDP) to 20 percent, but this was to be a mere prelude to the program unveiled in October 1938. Domestic armaments production was to be tripled overall, Hermann Göring announced, with Luftwaffe capacity to be increased fivefold to over 20,000 aircraft and the Kriegsmarine to be swiftly raised to a position of superiority over the Royal Navy. In addition, accelerated investment was ordered to make up for shortcomings in Germany’s transport infrastructure. It was, Göring concluded, “a gigantic programme, compared to which previous achievements are insignificant.”