A - The Federal Republic of Germany's economic relations with the Soviet Union

Summary

Since 1971 the FRG has been the Soviet Union's leading Western trading partner. As Chancellor Schmidt said in his statement on the 1978 Brezhnev visit to Bonn, there are good possibilities for the two economies of the FRG and the Soviet Union to complement one another. ‘The Soviet Union possesses … energy and raw materials we do not have. We, on the other hand, can offer exceptionally perfected technologies, capital goods, techniques’. The FRG has been the largest Western supplier of advanced technology to the Soviet Union: in 1977, for example, 34 per cent of Soviet imports of high technology came from the FRG, followed by Japan with 17 per cent of high technology exports to the Soviet Union. In the 1970s the USSR earned 75 per cent of its hard currency from the FRG through the sale of energy, raw materials, chemical materials, wood and cotton.

However, actual trade levels have never, in spite of exhortations, reached the sort of shares that were attained in 1931. Although trade expanded – between 1971 and 1978 the volume of exchange quadrupled – it did not match up to the grandiose possibilities which Brezhnev outlined during his visit to Bonn in 1973. The main underlying reasons for this were the, for the FRG side, unacceptable Soviet desires for large amounts of credit and for as much business as possible to be done on the basis of barter transaction, i.e. the costs of plants installed in the Soviet Union by West German firms to be paid for by deliveries from future production.