West Germany: Communist-Capitalist Partnerships

While East Germany is struggling just to keep its trade with the West from falling, West Germany is having no trouble finding ways of increasing its trade with the East. In the last decade, the value of goods that it sells to Iron Curtain countries has quintupled to $500 million annually. Now a new phase in the country’s push eastward is beginning. West Germany and Poland are setting up a company owned jointly by the private West German firm of IBAG (for Internationale Baumaschinenfabrik Aktiengesellschaft) and the Polish state.

The new company is not only the first arrangement of its kind between an Eastern and a Western European country, but is further distinguished by the fact that it will have its headquarters in West Germany. Primarily a trading company, it will handle all Polish exports and imports of heavy machinery, thus expanding IBAG’S Eastern market for cranes, cement mixers and stone-crushing machines while providing Poland with a much more effective Western sales outlet than its bureaucratic state export agency could ever hope to become on its own.

In setting up Depolma, small IBAG (1964 sales: $9,500,000) beat some giants to the punch. Since early this year, Krupp has been trying to develop several direct joint enterprises with Poland, but so far has been more successful in setting up triangular trade agreements. A Polish contractor is building a Krupp-designed cement factory in Yugoslavia, and shipyards in Bulgaria are making fishing vessels for Ethiopia under subcontracts from Krupp; the company has offered similar triangular deals to the U.S.S.R. Essen’s Rheinstahl has agreed to supply Hungary with steel and to engage later in joint manufacture of machine tools, radiators, boilers and pumps that will be marketed in third countries. The Soviet Union has shown little enthusiasm for triangular arrangements, but it is clearly interested in the Depolma idea, is sending a group to West Germany to study the setup.