146. Telegram From the Office of the High Commissioner for Germany to the Department of State1

2915. Paris pass CINCEUR for information as Bonn’s 213. Following is our evaluation effectiveness of use restrictions on interzonal trade (IZT) as countermeasure in connection current GDR road toll. Evaluation submitted in view paragraph 3 Deptel 2666, April 1, 479 to Berlin.2 and obvious fact that threat of partial or total suspension IZT presents logical first possibility as countermeasure where West Germans with Allied backing can negotiate from position justification and strength.

Background. Since 1952, IZT exchanges have increased steadily in importance, reaching level with deliveries each direction including certain invisibles valued slightly over DM-West 425 million calendar 1954 (including share West Berlin, which accounted for roughly 25 percent value total West German imports from Soviet Zone and less than 10 percent exports). Principal West German deliveries are iron, steel, and coke from Ruhr; agricultural produce; and gamut of producers and consumers goods whose export limited principally by poor Soviet Zone performance on counterdeliveries. Principal Soviet Zone exports brown coal briquettes; certain textiles; mineral oil products; sugar (now very short supply) and potatoes; and assortment of specialties such as office machines, cameras and optics, ceramics, hunting weapons, toys, Christmas decorations. Prospects for calendar 1955: at East German insistence, 1955 goods list signed January 19 ambitiously projects deliveries each direction at new high of 1 million accounting units equivalent DM-West. Prior road tax crisis, most [Page 357] optimistic West German export estimate on fulfillment was 700 million but substantial increase in exchanges was expected, particularly in key products. For further recent background, see Bonn D–1740, February 15, 1955.3

Comparative interests in IZT. In terms import policy and immediate requirements, healthy and relatively flexible West German economy clearly less vulnerable to impact suspension IZT than short-supply, rigidly planned East German economy. This particularly true at present juncture with Soviet Zone seriously short many raw materials needed for production and apparently under stress readjustments revised Soviet Bloc trading pattern, particularly in connection new GDR-Soviet trade agreement.4 Soviet Zone also under pressure to repay in equal installments in 1955 and 1956 Soviet credit 485 million rubles given in August 1953, which will involve additional burden.

On Western side only IZT import of substantial interest is brown coal briquettes (about 3.5 million tons during 1954 of which about ⅓ went to West Berlin last year); remaining imports being of interest largely as function of West German interzonal export policy. Brown coal briquette receipts of substantial importance to West Berlin, and alternative receipts of inferior West German briquettes likely to involve complications in view present uncertainty re transport facilities between Berlin and Federal Republic. As regards effect on West German exports, diversification of West German deliveries such that no one industry of importance likely to be gravely affected. Main sectors of West German economy involved are Ruhr iron, steel and coke which have adequate backlog orders; agriculture, where, in view of over DM 80 million deliveries to Soviet Zone last year, some problems might arise under embargo; in finished goods sector, principal instance which occurs to us as involving difficulties is Berlin electro-technical industry.

On Soviet Zone side, with very few exceptions resulting from negotiating compromises, IZT imports comprise products chosen by central trading authorities to meet pressing needs. Key sector IZT is covered by account No. 4, under which Ruhr iron, steel and coke traded against briquettes on virtual quid pro quo basis. Critical Soviet Zone need Ruhr products attested 1 by fulfillment briquette deliveries past 2 years despite Soviet Zone hostage this item. Even in past 2 months, during which deliveries from Soviet Zone under 1955 goods list generally very sparse pending clarification Soviet Zone delivery obligations to Soviet Bloc, briquette delivery schedules have been met. According Ministry Economics, Ruhr industrialists at Leipzig [Page 358] Fair gained impression that under current readjustments Bloc trading pattern Soviet Zone expects fewer steel and coke imports from Bloc and thus more dependent than ever on Ruhr deliveries (Washington in better position evaluate than we).

Specially imposed West German restrictions on import of traditional Soviet Zone consumer goods enumerated above would cause loss of profitable business for producing industries. Should also note that any West German restrictions this connection could probably be intensified helpfully if some restrictions imposed other Western countries (e.g., France bought $375,000 GDR office machinery 1954 while U.S. purchased $1.7 million various goods from Soviet Zone in same periods).

Conclusions. Clear that balance of advantage in terms economic vulnerability to reduction or stoppage IZT lies with West. This advantage sufficiently wide that unless GDR and Soviets have overriding pol motivations in mind they are likely to attempt to withdraw gracefully on Autobahn tax if faced with evidence Federal Republic determination to utilize IZT restrictions as countermeasure. However, equally clear that IZT restrictions constitute main weapon Allied countermeasures arsenal while Soviet side has other effective means harassment communications with Berlin. Therefore must consider that test strength would not necessarily lie between Autobahn tax and IZT restrictions but between broad harassment versus IZT restrictions in which case comparative vulnerability would swing in favor Soviets.

As policy problem for Western occupying powers, immediate use of IZT counterweapon has so far been simplified by prompt West German reactions to challenge. By its immediate suspension routine IZT negotiations, Federal Government in deliberations and public statements has exercised initiative and apparent skill and given sufficient indication its readiness to use IZT weapon if necessary. Consequently, in view considerations expressed Berlin’s 589 April 1 and 599 April 2,5 we believe techniques and timing re IZT countermeasures, as well as question whether initial suspension should be partial or total, can at moment be left primarily to West Germans. We shall of course continue keep in close touch with them re actions they propose.

General lines evaluation based upon consultation with and concurred by HICOG Berlin.

  1. Source: Department of State, Central Files, 962A.7162B/4–655. Confidential; Priority. Repeated to Berlin, Moscow, Paris, Heidelberg, and Duesseldorf.
  2. Paragraph 3 of telegram 2666 asked HICOG for an appraisal of the effectiveness of restrictions on interzonal trade. (Ibid., 962A.7162B/4–155)
  3. Not printed. (Ibid., 462A.62B41/2–1555)
  4. Reference is to the trade agreement signed at Moscow on March 25.
  5. Printed as telegrams 643 and 654 from Berlin to Bonn, Documents 142 and 143.