International: Eastern Bloc

Stalin wasted few words. Last week, the Molotov plan for eastern Europe was already a fully developed reality.

After Molotov’s Paris walkout (TIME, July 14), the Soviet Union hastily buttressed its economic spite-fence. In 30 days, twelve new trade pacts were signed between Moscow and satellites, or satellites and satellites. Shotgun treaties herded satellites more snugly into the Soviet economic pen. One rueful, resigned Rumanian characterized a Soviet trade agreement: “It is more blessed for us to give than to receive.”

Economic Pincers. Russian trade treaties, like reparations, were instruments of extortion, and, in method, straight out of the Nazi mold, with which Molotov had more than a newspaper reader’s acquaintance during the piping days of German-Russian war collaboration, 1939-41 (see cut). But the Soviet Union had also developed another kind of economic pincers—the so-called “joint company.” The pattern was 50-50 ownership by the Soviet Union and the local government, 100% administration by Soviet-picked executives. The function of the joint companies was to keep goods flowing into Russia. Through the joint-stock company and alleged reparations, Moscow had seized drum-tight control over:

¶ All Balkan shipping on the Danube, all Rumanian, Bulgarian, Hungarian air transport.

¶ One-third of Rumania’s oil (expropriation of British and U.S. interests would complete Soviet control), 90% of her coal, a large portion of her gold, metal, coke, chemicals, and part of her banking.

¶ One hundred eighty Hungarian enterprises in oil, aluminum, banking, insurance, manufacturing, mining and transport.

¶ Ten percent of all of Austria’s industry, including the Zistersdorf oilfield, Credit-Anstalt bank, factories making electrical machinery, tools, locomotives.

¶ Thirty percent of German industry in the Soviet zone (TIME, Aug. 26).

Maiming Monopoly. Through its threefold control, the Soviet Union was taking from eastern Europe not only manufactured goods that Russia desperately needed, but also products of which it had an abundance. Last year, the Soviet Union took most of Poland’s exportable coal (15 million tons), all of Rumania’s exportable timber (203,000 tons), all of Bulgaria’s exportable tobacco (35,000 tons).

Prewar, Europe’s not-too-healthy economy was partly sustained by the flow of such eastern products westward in exchange for machinery and manufactured goods which Russia is in no position to supply. Continued Soviet draining would plunge European living standards still farther, even below the Russian level of life, which has been described as a permanent economic depression.