Memorandum by the Chief of the Division of Eastern European Affairs (Durbrow) to the Director of the Office of European Affairs (Matthews)96

Subject: Soviet Policy of Tying Up Economic Activities in the Balkans.

In view of the United States Government’s announced policy of liberalizing trade in the post-war world and the efforts now being made to obtain from Congress authorization to reduce tariffs by an additional fifty percent in connection with the trade agreement policy, it is believed that careful thought and consideration must immediately be given to the restrictive trade policies the Soviet Government is putting into effect in eastern and southeastern Europe.

We have just received, through unofficial channels, what we believe to be the full texts of the recently-concluded Soviet-Bulgarian and Soviet-Rumanian Trade Agreements. As far as I am aware, we have not as yet received a copy of the recently-concluded Soviet-Finnish Trade Agreement.97 The general tenor of these agreements is very restrictive and are [sic] apparently aimed at excluding free trade in these areas by other powers. The agreements are in effect barter agreements and the prices for the goods delivered by the smaller countries are apparently very low. Moreover, provision is made in the [Page 853] Rumanian agreement, for instance, for the creation of jointly-owned Rumanian-Soviet concerns to exploit the oil, mineral and other resources of the country and provision is made for the creation of a joint Rumanian-Soviet bank which apparently might be used to control the entire financial structure of Rumania.

I believe it is fair to assume that the Soviet Government will make similar agreements with all other countries in the areas under its control and that by this method they will create an almost airtight economic blackout in the entire area east of the Stettin-Trieste line. This blackout, coupled with the effective news blackout in this area, presents a very serious problem which we must give immediate consideration to.

E[lbridge] D[urbrow]
  1. In transmitting this memorandum to the Assistant Secretary of State for Economic Affairs, William L. Clayton, on May 31, Mr. Matthews wrote that it “merely points out conditions that are developing on the economic side in the Balkans. What can be done about it at the present stage, it is difficult to say.”
  2. A general description of these trade agreements concluded between the Soviet Union and Bulgaria on March 14, 1945, the Soviet Union and Finland on May 8, 1945, and the Soviet Union and Rumania on May 8, 1945, all signed in Moscow, is given in an article by Raymond H. Fisher, “Agreements and Treaties Concluded by the U.S.S.R. in 1945,” Department of State Bulletin, September 1, 1946, pp. 392, 393, and 396–398, respectively.