The Devils' Alliance: Hitler's Pact with Stalin, 1939-1941

^{CHAPTER 6} OILING THE WHEELS OF WAR

ON THE LAST DAY OF MAY 1940, THE CITIZENS OF LENINGRAD spotted a peculiar sight. Amid the unremitting grayness of a Baltic late spring day, a German heavy cruiser was being towed into a shipyard on the western edge of the city. There was no bunting, no military band, and little ceremony. No mention was made of the arrival in the Soviet press; instead Izvestia and Leningradskaya Pravda reported the Anglo-French collapse at the other end of the European continent. Consequently, the huge gray monster attracted little attention as it was nudged and cajoled into place by puffing black tugs. Nonetheless, its arrival was an event of profound significance.

The ship in question was the Lützow. Named in honor of Ludwig Freiherr von Lützow, a Prussian hero of the German wars of liberation who had raised a militia in 1813 to fight alongside the Russians against the French, she had been constructed in Bremen and launched in July 1939. As one of the Admiral Hipper class of heavy cruisers, she was larger and heavier than Germany’s famed “pocket battleships,” over two hundred meters from stem to stern, with a displacement of just under 20,000 tons.

In their finished form, the Admiral Hipper–class cruisers were formidable vessels. Powered by three Blohm & Voss steam turbines, they boasted a top speed of thirty-two knots and carried a crew of over 1,300. Armament was provided by an array of weapons, with the main battery consisting of four 8-inch twin gun turrets, each weighing approximately 250 tons, with a range of around thirty-three kilometers. The most famous of the class would be the Prinz Eugen, which entered service in August 1940 and came to prominence with its role in the sinking of HMS Hood in 1941 and the audacious “Channel Dash” of the following year, when a German naval squadron forced the Dover Strait en route to its home ports. Despite numerous engagements with Allied forces, the Prinz Eugen would be the only one of Germany’s large surface vessels to survive the entire war.

For all its impressive pedigree, however, the few Leningraders watching events in 1940 would have noticed that the Lützow had not been finished. In fact, despite her sleek lines and impressive size, she looked rather unlike a warship, with little finished superstructure above firstdeck level and only two of her four turrets completed. Below decks she was similarly incomplete, with no secondary antiaircraft armament and, crucially, no propulsion system. Indeed, if the time taken to fit out her sister ships were any guide, the Lützow would not be ready for commissioning for at least another year.

Despite such shortcomings, the delivery of the Lützow to the Soviets was a remarkable event. For one thing, German engineers had originally devised the Admiral Hipper class to meet the threat posed by the Soviet Kirov class of cruiser, first launched in 1936. So, if nothing else, there was a certain irony in the Lützow’s delivery to Leningrad. Moreover, the German navy was not exactly awash with large surface ships. Alongside its four battleships—the Bismarck, Tirpitz, Gneisenau, and Scharnhorst—it possessed only two smaller “pocket battleships” of the Deutschland class, the Deutschland and the Admiral Scheer (the third of that class, the Graf Spee having been scuttled in the South Atlantic the previous winter). Beyond that, there were only the five heavy cruisers of the Admiral Hipper class. And, of these, the Blücher had been sunk only a few weeks earlier, when she had succumbed to shellfire in Oslofjord during the Norwegian campaign; the Seydlitz and the Prinz Eugen were still unfinished; and the Lützow was now being handed over to the Soviets, leaving only the Admiral Hipper in German service. In the circumstances, many Germans would have seen the delivery of the Lützow as an act of foolhardy generosity.

Officially, however, the transfer of the Lützow to the Soviets was trumpeted as a significant step in the improvement of Nazi-Soviet relations—all the more so as it was only the headline transaction in a burgeoning commercial relationship between the two, which had accompanied the signing of the Nazi-Soviet Pact the previous August. Indeed, as the Lützow was eased into her berth at the Baltic Shipyard, German and Soviet representatives were busy finalizing a host of commercial deals in Moscow and Berlin covering the supply of all manner of raw materials and finished goods. To those few Leningraders watching, the Lützow must have seemed symbolic of a new age of détente and cooperation between Europe’s two primary totalitarian powers. In truth, however, she would become the symbol of a relationship whose rich potential, mired in mistrust and political machinations, would never be realized.

THE IDEA OF ECONOMIC COOPERATION AND TRADE BETWEEN GERMANY and Russia was nothing new, of course. Indeed, the two were remarkably well suited economically, with raw-material-rich Russia, keen to industrialize, a natural complement to the industrial powerhouse of Germany, ever hungry for raw materials. Since the late nineteenth century, German industrialists had been mesmerized by the prospect of tapping into Russia’s vast mineral resources, while Russia’s leaders had long sought outside technological help for their own industrialization drive. Hence, many on both sides foresaw a mutually beneficial arrangement beckoning if the political hurdles could be overcome.

The relationship had stuttered somewhat in the ideologically charged atmosphere after World War I, but the two countries had maintained economic relations, of sorts, throughout the interwar period, which had blossomed into full-blown collaboration when political and strategic circumstances had aligned. One such blossoming occurred in 1922, when Germany and Soviet Russia shocked the world by concluding the Treaty of Rapallo. With both states effectively excluded from the “community of nations”—one as a discredited ex-enemy, the other as a feared revolutionary—the two pariahs found common ground for a strategic and economic arrangement. Rapallo caused consternation in Allied capitals, but its wider significance has been rather exaggerated. It was as much a symbolic gesture—a joint thumbing of the nose at London and Paris—as it was an expression of practical policy. It was neither a formal alliance, nor a declaration of neutrality, nor a nonaggression pact. Rather it was a marriage of strategic convenience, a temporary expedient in a hostile world, that was intended as much to impress other potential suitors as to signify a genuine meeting of minds. As Churchill noted at the time, Russia and Germany merely shared a “comradeship in misfortune.”

Consequently, Rapallo’s political terms were rather conventional: the two signatories agreed to renounce all mutual territorial and financial claims and to normalize their diplomatic relations with one another. Its economic aspect, however, was more eye-catching, with both sides granting most favored nation status to each other and promising mutual cooperation in meeting their economic needs. The follow-up Treaty of Berlin of 1926 went further, extending a 300 million reichsmarks (RM) credit facility to the Soviet Union, backed by German banks. Although forged in a moment of political adversity, the German-Soviet relationship proved remarkably resilient, lasting into the early 1930s, long after the strategic rationale that spawned it had disappeared. Indeed, by 1932, the Soviet Union was taking 47 percent of her imports from Germany—the same percentage as in 1914—and receiving fully 72 percent of her machinery imports from German firms.

With Hitler’s rise to power in January 1933, the relationship with the USSR naturally began to change. Hitler had made his career out of baiting the Bolsheviks abroad and German communists at home; yet he did not hurry to kill off the relationship immediately and even renewed the Treaty of Berlin with Moscow in May 1933. In truth, however, and quite aside from ideological concerns, the economic relationship with the Soviet Union no longer served German interests as clearly as it had a decade earlier, and so it was allowed to wither. For one thing, Hitler had made a strategic decision to prioritize autarky and began reorienting German industry away from exports and toward domestic production for rearmament and infrastructure. For another, the relationship with the Soviets was seen as much less vital from the German perspective, especially as barely 6 percent of German imports came from the Soviet Union while only 10 percent of German exports went in the other direction, and those exports had to be funded by a raft of complex credit and loan agreements. While Germany had more reliable economic partners elsewhere, trading with the Soviets was scarcely worth the effort.

Yet, though the political relationship between Moscow and Berlin descended into rancor in the mid-1930s, the economic connection was nonetheless kept alive. The head of the Soviet trade mission to Berlin, David Kandelaki, arranged a number of meetings with Hitler’s minister of economics, Hjalmar Schacht, in 1935 and 1936, in which he not only argued for a rejuvenation of the German-Soviet economic relationship but also unsuccessfully floated the idea of a general normalization of relations between the two countries. Well-connected and a Georgian like Stalin, Kandelaki was certainly no maverick; it has been suggested that he acted as Stalin’s own special envoy, seeking to bypass traditional diplomatic channels to build bridges between Moscow and Berlin. Doomed to failure by the prevailing political winds, however, he was recalled to Moscow in April 1937, where he would share the grim fate of many of his fellows. Arrested in September of that year in the Great Purge, Kandelaki would be executed in July 1938. Ironically, it was almost certainly his contacts in Berlin that spelled his end.

Kandelaki was not alone in his ambitions, and despite his earlier failure, a few in German diplomatic and government circles—sometimes referred to as “Easterners”—were persistent advocates of a political and economic arrangement with the Soviet Union. One of these was Karl Schnurre, a diplomat and legal expert who from 1936 was head of the Eastern European Economic Section of the German Foreign Office. Schnurre maintained—as did a number of others, such as the German ambassador in Moscow, Friedrich-Werner von der Schulenburg—that supplies of Soviet raw materials were of such vital importance to Germany’s continued economic health that she should be willing to put up with the attendant irritations and even make substantial political concessions to secure them.

Schnurre was certainly not wrong. Germany by 1939 was still broadly dependent on imports for almost all her raw materials: 80 percent of her rubber, 60 percent of her oil, 60 percent of her iron ore, and 100 percent of her chrome and manganese had to be imported. The Soviet Union, meanwhile, was the world’s largest producer of manganese, the second-place holder in chrome production, and the third largest source of crude oil and iron ore. Clearly, as many among the Easterners had maintained, Nazi Germany and the Soviet Union were a very good fit economically—if only the political antipathies could be assuaged.

The primary difficulty for Schnurre was that—for the early part of his work, at least—he was very much swimming against the tide, advocating a practical economic arrangement when the ruling elites of both states were too busy fulminating against each other to contemplate any collaboration. Like Kandelaki before him, Schnurre found that as long as the political benefits of mutual antipathy outweighed the economic benefits of cooperation, he would find little purchase for his arguments.

By 1939, however, the political constellation was beginning to shift. Frustrated by what he perceived as Western “meddling” at Munich in September 1938 and alarmed by reports of growing Anglo-French rearmament, Hitler increased the pace of his strategic planning. At home, this meant a renewed focus on an already burgeoning armaments sector. Since 1933 military-related production in Germany had risen from 1 percent of gross domestic product (GDP) to 20 percent, but this was to be a mere prelude to the program unveiled in October 1938. Domestic armaments production was to be tripled overall, Hermann Göring announced, with Luftwaffe capacity to be increased fivefold to over 20,000 aircraft and the Kriegsmarine to be swiftly raised to a position of superiority over the Royal Navy. In addition, accelerated investment was ordered to make up for shortcomings in Germany’s transport infrastructure. It was, Göring concluded, “a gigantic programme, compared to which previous achievements are insignificant.”

In foreign affairs, Hitler was no less ambitious. Oddly, he had drawn from the West’s efforts to resolve the Czech crisis at Munich in September 1938 the opposite conclusion to that arrived at by Stalin. Whereas the Soviet leader had seen a baleful foreshadowing of a German alliance with the West, Hitler had concluded that the Western powers were now his implacable opponents. Seeing the prospect of war with Britain and France as inevitable, Hitler started planning for conflict sooner rather than later—by 1940 or 1941 at the latest—while his perceived advantage in men and materiel still held good.

Such vast strategic plans required a rethinking of economic priorities. The German economy had already been transformed under the Nazis. From the postdepression doldrums of the early 1930s with 6 million unemployed, Nazi armaments and public works programs had produced near-full employment by 1938. Yet, by the autumn of that year, the breakneck economic growth was beginning to stall as an economy geared primarily toward rearmament and domestic consumption created huge inflationary pressures. The New York Times reported in September 1938 that “alarming” inflation was looming for the German economy, stating that the amount of money in circulation was 40 percent higher than it had been the previous year, which revealed that the Reichsbank had been managing the early stage of the crisis by simply printing money. By the end of the year—just as Hitler was announcing his intention to triple armaments production—the Reichsbank announced that it faced a cash flow deficit of 2 billion RM and advised a renewed concentration on exports as the urgent remedy.

Unappreciative of such interventions by the “dismal scientists” of the Reichsbank, Hitler sacked its director and the genius behind Nazi Germany’s economic recovery, Hjalmar Schacht. But he was nonetheless forced to make some concession to his critics. In a keynote speech on January 30, 1939, on the sixth anniversary of the Nazi seizure of power—a speech best known for his “prophesy” that a return to war would lead to the “annihilation of the Jewish race” in Europe—he gave his answer. After questioning the “sagacity” of the “world economic scholars,” whose diagnoses, he complained, never agreed, Hitler conceded that a shift to exports in the German economy was, after all, necessary: “We must export in order to be able to purchase food from abroad. Since these exported goods use up raw materials which we do not possess, this means we must export yet more goods to secure these raw materials for our economy.” Consequently, Hitler admitted, Germany was compelled “by dire necessity” to “export, or perish.” At the same time, a number of official studies concluding that Germany would be unable to wage a major war without access to Soviet resources highlighted the urgent need for imports. This, almost verbatim, was what the Easterners in the German Foreign Office had long argued. Perhaps now they would be given the chance to put their ideas into practice.

Of course, the decision had not yet been made; politics still held the whip hand over economics. Yet, behind the scenes, the economic conditions for a Nazi-Soviet deal were being worked out; indeed, they were already clear in their essentials by the end of 1938. What followed, then, was an elaborate dance, punctuated by procrastination, intransigence, and occasional spats, in which Soviet and German economic negotiators haggled and horse-traded, waiting for a favorable political wind. Only in mid-July 1939, as the clouds of war were already darkening over Europe—and when Karl Schnurre finally received his Soviet counterpart, Evgeny Babarin, for high-level discussions in Berlin—did the talks begin in earnest.

By this point, Hitler was in a hurry. In his haste to expand Germany’s frontiers—his occupation of the “rump” Czech lands and his saber rattling against Poland—he had painted himself into something of a strategic corner from which only an arrangement with the Soviets appeared to offer a coherent exit. The economic aspects of any possible deal were still secondary, of course, but they were rapidly gaining in significance. The old arguments about the benefits of access to Soviet raw material reserves were not only more relevant than ever but amplified by the acute awareness on the German side that any outbreak of war with Britain would see the use of the traditional weapon of the blockade, which had gravely hampered Germany’s war effort in World War I, severely undermined morale, and cost many thousands of civilian lives. Hitler knew that the supply of Soviet foodstuffs in the event of war would effectively circumvent the best efforts of the Royal Navy to starve Germany into submission.

For its part, the Soviet Union could benefit enormously from access to German technology. In its efforts to industrialize in the interwar years, it had often struggled to fund its own technological development or bring in the best innovations from abroad. An arrangement with Germany, it was thought, would help to solve those problems, providing not only vital military hardware but also precision engineering equipment, such as turbines and lathes, and the latest optical and metallurgical technology. It was testament to the importance of this economic aspect that a commercial agreement was made an essential precondition of any wider political pact with Hitler’s Germany. Yet, despite the potential benefits that the alignment with Berlin held for him, Stalin firmly believed he held the trump cards and consequently—through delays and procrastination—drove a very hard bargain. The agreement, when it came, would be largely on Soviet terms.

On August 20, 1939, three days before the Nazi-Soviet Pact, Berlin and Moscow finally signed a Commercial Agreement. The Soviet Union committed to supplying 180 million RM of raw materials to Germany in return for a German commitment to provide 120 million RM of industrial goods. In addition, a credit line of 200 million RM was extended to Moscow, backed by the German government, with an effective interest rate of 4.5 percent over seven years, to be repaid in raw material shipments from 1946. Little wonder that Molotov would laud the treaty as better than “all previous agreements,” adding, “We have never had any equally advantageous economic agreement with Great Britain, France, or any other country.” In principle at least, the economic treaty with Nazi Germany was as good as it got.

So while the world reeled in August 1939 from the revelation of the political pact between Moscow and Berlin, negotiators from the two sides began hammering out all those aspects of the Commercial Agreement that were unclear or unsatisfactory, endeavoring to turn the principle of economic collaboration into a practical reality. It was not an easy task. For all the bonhomie on show, mutual suspicions and bad faith persisted, not least due to the speed with which German forces overran Poland that September. Consequently, the wording of the agreement was pored over, analyzed, and reinterpreted, and figures and prices were proposed, rejected, and amended. All the while, the German side, having run the greater political and military risk, expected concessions from the Soviets, while Stalin’s negotiators, perceiving that they had the upper hand, steadfastly refused to compromise. If this was the honeymoon period, it did not augur well for the success of the marriage.

As the torturous negotiations dragged on into the winter, there were some moments of levity, at least in retrospect. On September 27, for instance, a bemused Schnurre was inadvertently given the red carpet treatment on arrival at Khodynka airfield in Moscow after Ribbentrop’s plane had been delayed. Although an accurate assessment of who was the “brains” on the German side, this certainly would not have pleased Ribbentrop, who was eternally sensitive to any perceived slight. Some weeks later, Schnurre’s return to Moscow proved similarly problematical, as he was incorrectly named in Soviet press reports as “Ambassador Baron von Schnurre,” despite the fact that he was neither an ambassador nor a baron and had been a regular visitor to Soviet government circles over the previous five years. It is unclear whether the Soviets were trying to flatter or ridicule him.

Most bizarre of all, perhaps, was the Soviet economic mission that toured Germany in late October 1939, essentially to draw up a shopping list of German military and technological wares required by Moscow. “Shopping list,” in fact, was the appropriate term. When the forty-five-strong Soviet delegation arrived—all decked out in brand-new brown coats, hats, and yellow shoes—each member carried empty suitcases to accommodate the myriad consumer goods unavailable at home. Once they got down to work, other peculiarities quickly manifested themselves, not least an inveterate suspicion of their German counterparts. According to the later memoir account of one of their number, Lieutenant General and Vice Minister of Aviation Alexander Yakovlev, the Germans were generous and “genial hosts,” putting the Soviet delegation up in the best hotel in Berlin, the Adlon, and treating them to a number of tours and displays of equipment. Yakovlev recalled with incredulity—his memory doubtless colored by postwar sensibilities—that “they smiled at us, shook our hands, paid us compliments, and tried to create an atmosphere of friendship and sincerity.” He went on to describe a meeting with his counterpart, General Ernst Udet, and Hermann Göring at the Johannisthal airfield outside Berlin, where a demonstration of German materiel was held: “In strict order, as though on parade twin-engine Junkers-88 and Dornier-215 bombers, single-engine Heinkel-100 and Messerschmitt-109 fighters, Focke-Wulf-187 and Henschel reconnaissance planes, a twin-engine Messerschmitt-110 fighter, a Junkers-87 dive bomber, and other types of aircraft. The crews—pilots and mechanics—stood rigidly at attention by each airplane.” Yakovlev recalled Udet taking the head of the Soviet delegation, Ivan Tevossian, up for a turn in a Fiesler Storch reconnaissance plane and making a “splendid landing, stopping exactly where it had started from.” When Tevossian expressed his satisfaction, Göring presented the plane to him as a gift. As Yakovlev wrote of the display, “Everything was impeccably organised and made rather a good impression. We returned to the Adlon strongly impressed by what we had seen.”

Not everyone in the group was quite so impressed, however. General Dmitri Gusev, for instance, appeared to believe that the Germans were taking them for fools and were only showing obsolete items. After all, he queried, “how could they show us the true state of their air force equipment?” On reflection, Yakovlev, too, was uneasy, concerned strangely by the “candidness with which the most secret weaponry data had been revealed to us.” He would later suggest that the Germans seemed more interested in intimidating their guests with their military power than anything else. However, when these complaints were passed on to their host, Ernst Udet, he was indignant, replying, “I give you my word as an officer. We’ve shown you everything; if you don’t like what you saw, don’t buy. We are not pressuring you—do what you think best.”

Yet, although Gusev’s comment arguably said more about Soviet than German attitudes, he had a point. For all the affability of their hosts, the Soviet delegation was not being shown the true state of German technology. As interpreter Valentin Berezhkov recalled, precautions were put in place to prevent members of the Soviet delegation from seeing verboten items. For his part, Berezhkov was sent to the Krupp factory at Essen to oversee the construction of the outstanding main turrets intended for the Lützow; yet the area was separated from the rest of the factory by a thick tarpaulin curtain, leaving so little space that the Krupp engineers could barely work. Berezhkov was thus prevented from even seeing the remainder of the workshop.

Sensitive air technology was similarly shielded from view. Despite touring the country and visiting countless sites—including BMW in Munich, Messerschmitt in Augsburg, Junkers in Dessau, Focke-Wulf in Bremen, and Arado, Henschel, and Siemens in Berlin—the Soviet delegation was not shown either the Focke-Wulf 190, which was then in development, or the new jet engine technology being prepared by BMW and Junkers. Moreover, a measure of disinformation was employed. The Germans made great claims about the Heinkel He-100 fighter, for instance, which, despite having vied for the airspeed record earlier that year, was known to be dogged by design glitches and consequently had not even been accepted for operational use by the Luftwaffe.

Perhaps sensing that their German partners were not being entirely open, the Soviet naval delegation was especially demanding, arriving with a lengthy list of requests, including access to inspect the battleship Scharnhorst, the heavy cruiser Admiral Hipper, a minelayer, a destroyer, and a type VIIB U-boat. Indeed, Soviet requests seemed to grow almost exponentially, including everything from torpedo fuses and detonators to binoculars and radios—as well as many items that the Germans did not even have. Interestingly, the German naval attaché in Moscow was not accorded reciprocal privileges. Little wonder, then, that one German admiral concluded that the entire process was merely a cover for a concerted campaign of Soviet espionage.

Negotiations in other spheres were just as fraught and complex. While the various Soviet delegations were perusing German wares, German businessmen streamed to Moscow to open talks of their own, many of them ending up hopelessly entangled in Soviet red tape and achieving little beyond provoking a suspension of trading applications and further eroding an already fragile trust. Meanwhile, the civil servants and bureaucrats attempted to thrash out a mutually acceptable agreement, and it was far from easy.

Believing that the relationship was far more critical to the German side than to their own, the Soviet negotiators drove a very hard bargain, demanding huge amounts of the most advanced German technology while obstructing their own reciprocal deliveries. The Germans were shocked, for instance, when they received a forty-eight-page list of Soviet demands at the end of November 1939—including everything from cruisers to fighter aircraft, artillery pieces, and complete industrial plants—amounting to a massive 1.5 billion RM. Moreover, Soviet negotiators were working to turn the original agreement upside down by demanding German finished items in advance of their own supply of raw materials, while at the same time invoking every obstacle possible to hinder German requests, inflating prices on a whim or arguing that infrastructure or rolling stock were insufficient to handle the volumes required. Indeed, senior German negotiator Karl Ritter was obliged to invoke the positive spirit of the Nazi-Soviet Pact, “fully approved by Stalin,” in an effort to persuade the Soviets to return to those original terms as the basis for their talks. In a later memorandum, Ritter was more critical, noting, “Negotiations are not proceeding favourably. Both in general and in detail, the other side is not showing the gratitude that should result from the new political situation. Instead they are trying to get all they think they can.” If the Germans had imagined that they could easily tap into the Soviet Union’s vast natural resources, they were sorely mistaken.

In fact, some on the German side began to tire of the endless negotiations and exorbitant Soviet demands. Ribbentrop delivered a rebuke to the Soviet ambassador in Berlin, Alexei Shkvartsev, reminding him, “Germany is at war,” and adding that “everything humanly possible has been done [from the German side] and beyond that one could not go.” Others were less conciliatory. The German military was growing frustrated with the Soviets’ “voluminous and unreasonable” demands, and the negotiators, Ritter and Schnurre, increasingly had to contend with objections and refusals from their own side. Rumors of German discontent even reached the ears of the American chargé in Berlin, who reported back to Washington that German officials were “less sanguine” about the relationship with the Soviets than they had been hitherto.

This proved something of a crisis for Nazi Germany, not least because the much vaunted supplies from the USSR, which it had hoped would circumvent the British blockade, were scarcely materializing. Indeed, according to American journalist William Shirer, the Germans were already adopting some peculiar measures to reassure the public, falsely labeling supplies of butter and flour from Slovakia and Bohemia as “Made in Russia” to demonstrate the supposed benefits of the Soviet relationship.

Meanwhile, behind the public relations facade, German urgency—if not desperation—was increasing. Hitler had been making preparations for the campaign in the West against Britain and France since November 1939, and yet he was still receiving only a trickle of the vital supplies he had expected from the Soviet Union. In oil, for example, Germany required 60,000 tons per month from the USSR just to maintain its own stocks, but it was so far receiving only a fraction of that figure. Similarly, German grain supplies were increasingly perilous, with a 1.6 million ton shortfall expected for 1940, even under optimal conditions and assuming a full quota of Soviet deliveries. Far from oiling the wheels of Hitler’s war machine, it seems, Soviet supplies were proving a serious hindrance.

Given the looming crisis, the big guns were brought into play: Hitler stressed to his acolytes the necessity of accommodation with the Soviets, while Ribbentrop endeavored to bring Stalin into the talks, writing to him directly in early February 1940 to request that the USSR fulfill the promise “given during the September negotiations that the Soviet government was willing to support Germany during the war.” Remarkably, the appeal worked; Stalin vowed to take Ribbentrop’s views “into consideration,” and within days negotiators in Moscow were finalizing details of a new German-Soviet Commercial Agreement. The USSR now agreed to supply 650 million RM of raw materials over the following eighteen months, two-thirds of it within the first year, in return for Germany supplying the same value of military and industrial hardware over the following twenty-seven months to May 1942, with two-thirds of that total falling due within the first eighteen months. The figures involved were certainly considerable. Combined with the earlier Credit Agreement of August 1939, the new Commercial Agreement tied the economies of Nazi Germany and the USSR closely together, committing each to around 800 million RM of business in the first two years.

The reception, on both sides, was suitably positive. The Soviet press—which had reacted coolly to the original August 1939 agreement—was enthused, praising the February 1940 deal as being of “great economic and political significance” and providing “for the future development of cooperation between the USSR and Germany.” Stalin gave his own assessment in the final phase of talks, stating, “The Soviet Union sees this not merely as a normal treaty for the exchange of goods, but rather as one of mutual assistance.” The Nazi press concurred, hailing the new agreement as “more than a battle won, it is quite simply the decisive victory” in combating the British blockade. German negotiators were no less effusive. Karl Schnurre minuted to the Foreign Office in Berlin that the revised agreement represented “the first great step towards the economic programme envisaged by both sides.” Gustav Hilger, meanwhile, recalled in his postwar memoir that the Commercial Agreement signified “a door to the East opened wide, and British efforts at an economic blockade of Germany considerably weakened.”

The various lists of commodities and products appended to the Commercial Agreement are highly instructive and appear to confirm Hilger’s assessment. The Soviet Union, for instance, committed to supply 1 million tons of feed grains, 900,000 tons of petroleum, 800,000 tons of scrap and pig iron, 500,000 tons of phosphates, and 500,000 tons of iron ore. In addition, lesser amounts were stipulated of platinum, chromium ore, asbestos, sulfur, iridium, iodine, glycerin, albumin, tar, lime, and numerous other products.

In return, the items to be supplied by the Germans were set out in four separate lists. The first of these—concerning military equipment—ran to forty-two typewritten pages, encompassing everything from submarine periscopes and hydrographic instruments to complete tanks and aircraft, including five Messerschmitt Bf-109E fighters, five Messerschmitt Bf-110C fighter-bombers, two Junkers Ju-88 bombers, two Dornier Do-215 light bombers, five half-tracks, two Fa-226 helicopters, and one “fully equipped” Panzer III. Most surprisingly, perhaps, the Soviets also ordered ten single-seat Heinkel He-100 aircraft—more than any other single model—evidently convinced by the spurious claims of their German counterparts that it really was superior to the Bf-109. In addition, they demanded numerous engines and spare parts, including 1,500 spark plugs, 10,000 piston rings, 30 propellers, and myriad other items, including chemical warfare equipment, artillery pieces, armored vehicles, gun sights, optical instruments, and various types of bombs and ammunition.

Other items to be provided by Germany covered sundry military and industrial supplies, including equipment for the mining, chemical, and petroleum industries, turbines, forges, presses, cranes, and machine tools. Beyond that, the Soviets wanted 146 excavators, as well as locomotives, generators, diesel engines, steel tubing, and a number of ships, including a 12,000-ton tanker, which was to be delivered “promptly.” A final list outlined those items in which the Soviets expressed “an interest” for possible future purchases, “depending on conditions,” including plants for coal hydrogenation, vulcanization, and synthetic rubber production. In essence, the Soviets were demanding from Germany nothing less than the shortcut to an advanced military-industrial economy.

One of the first items on the Soviet “shopping list” was the heavy cruiser now referred to by the Germans as the “ex-Lützow.” As with many other categories, the negotiations that led to the sale of the Lützow had been rather tortuous. The Soviets had first requested the ship in early November 1939, along with the similarly unfinished Seydlitz. Then, at the end of that month, the stakes had been raised further when another Admiral Hipper–class cruiser, the Prinz Eugen, as well as the plans for the battleship Bismarck, were added to the list of Soviet demands. Unsurprisingly, the matter was passed on to Hitler, who vetoed the sale of the Seydlitz and the Prinz Eugen and agreed to the sale of the Bismarck plans only on condition that they would not be permitted to fall into the “wrong” (i.e. British) hands. With a green light for the sale of the Lützow, the two sides could begin haggling over price. The Soviets dismissed out of hand an initial suggestion from Göring of 152 million RM, nearly twice what construction had cost. But by February 1940 the sale of the vessel was included within the Commercial Agreement, despite the fact that no price had yet been arranged, suggesting that both sides considered the deal as good as done. According to the wording of the agreement, the now ex-Lützow was “to be delivered for completion in the USSR” including her “hull and all equipment, armament [and] spare parts,” as well as “complete plans, specifications, working drawings and trial results.”

Thereafter, negotiations on price dragged on until early May 1940, at which point a renewed German proposal of 109 million RM for the cruiser and ammunition was immediately met with a Soviet counteroffer of 90 million RM. Just as Germany’s forces were invading France and the Low Countries that month, it seems her negotiators tired of haggling and agreed to split the difference, fixing a price of 100 million RM for the ship, despite the fact that the German side considered that figure “not acceptable from a strictly commercial point of view.” With that, the ex-Lützow duly left Bremen under tow from oceangoing salvage tugs, to arrive in Leningrad at the end of May.

Other German deliveries to the USSR were rather less involved. By the late spring of 1940, after the German campaign in Scandinavia had got underway, Soviet obstructionism eased somewhat, and negotiations that previously had dragged on for months could be smoothed over in a matter of days or weeks. Preparations were then swiftly made for the delivery of many of the other items stipulated in the February 1940 agreement. Many of the aircraft that had been ordered were simply flown via Königsberg directly to Moscow, where the Soviets had laid on full ground support, accommodation, refueling, and meteorological facilities for the incoming crews. Military and industrial items were sent by train as their delivery deadlines, stipulated by the various agreements, fell due. After a sluggish start with the wrangling over terms and payments, German exports to the USSR rose to a monthly total of 15 million RM in May 1940, peaking at 37 million RM in December.

Soviet deliveries to Germany were theoretically easier to handle, being predominantly bulk cargoes of oil, grain, and foodstuffs. However, the Soviet Union’s creaking infrastructure did throw up occasional bottlenecks and obstacles, not least at the two main transit points into German-occupied Poland—at Brest-Litovsk and Przemyśl—where a change of rail gauge further complicated matters. Consequently, most of the oil was shipped from the Soviet Caucasus by sea to Varna in Bulgaria, then by rail to Germany, thereby avoiding the problem areas. Nonetheless, Soviet deliveries to Germany rose from a value of around 10 million RM per month in the spring of 1940 to peak at nearly ten times that in September of that year.

After initial teething troubles, therefore, German-Soviet trade grew impressively through 1940, with Soviet exports to Germany estimated at 404 million RM over the year, compared to German exports to the USSR of 242 million RM. A glance at German foreign trade figures for 1940 shows that, in the latter half of the year, exports to the Soviet Union consistently amounted to over 60 percent of monthly totals. At first blush, then, the economic relationship appears to have been delivering on its promise to provide the Soviet Union with vital examples of the latest precision engineering with which to continue its ongoing industrialization program, while supplying Nazi Germany with essential fuel and foodstuffs for the home front. Some have made even grander claims, suggesting that Soviet supplies made the decisive difference to German forces in their invasion of France and the Low Countries in May 1940. As one author has eloquently suggested, “Guderian’s tanks operated largely on Soviet petrol as they dashed for the sea at Abbeville, the bombs that levelled Rotterdam contained Soviet guncotton, and the bullets that strafed British Tommies wading to the boats at Dunkirk were sheathed in Soviet cupro-nickel.”

The truth is more mundane. Soviet deliveries of fuel and other military supplies were only trickling into Germany by the early summer of 1940. By May, total deliveries of oil had barely topped 100,000 tons, contributing only one-seventh of German oil stocks, with a similar figure for grain of 103,000 tons. Such modest amounts were unlikely to have made much noticeable contribution to the French campaign.

In fact, the wider economic arrangement hammered out between the Nazis and the Soviets was much less influential than the casual observer might imagine. It is easy to be misled by the figure for September 1940, for instance—when German exports to the USSR made up 76 percent of the monthly total—into assuming that the economic relationship had undergone a significant change for the better. Such large percentages are deceptive, however, and merely demonstrate that German export trade had virtually collapsed following the outbreak of war, leaving the Soviet Union as practically Berlin’s only serious trading partner. Germany’s total export figure for September 1940 was less than a quarter of the total for March of that year, when the last prewar orders were being filled. Over the year as a whole, German exports to the USSR were decidedly modest, amounting to less than 1 percent of German GDP. Although an increase on the immediately preceding peacetime years, such volumes were broadly in line with those from the early 1930s and less than import totals from the USSR for the years 1927 to 1930. For all its promise, then, the much vaunted Commercial Agreement barely restored the economic status quo that had preceded Hitler.

For the Soviet Union, meanwhile, the relationship was a little more vital, comprising 31 percent of its total imports for 1940 and contributing to a brief boom in export trade in which exports of oil doubled, grain increased fivefold, and the total figure rose by 250 percent. In 1940, nearly 53 percent of the USSR’s total exports were destined for Nazi Germany. But, as in the German case, the paucity of Soviet trade in the immediately preceding years means that such apparently impressive increases can be deceptive. In truth, the new relationship was barely reaching parity with the volumes of trade that had gone before. The volume of Soviet imports from Germany in 1940, for example, was quantitatively less than the annual totals from the decade between 1924 and 1933, while Soviet exports in the other direction fell short of the peak of the 1926–1930 period. Thus, although the Nazi-Soviet Pact marked a very definite political departure, its economic aspects were much less remarkable, hardly matching the volumes of German-Soviet trade that had already existed a decade earlier.

Of course, it wasn’t just sheer volumes that were supposed to be decisive; it was also the specifics. The economic relationship was intended to address particular shortcomings, such as the Soviet deficiency in precision engineering and Germany’s dependence on the world market for essential supplies. For the Soviets, the results were rather mixed in this regard. In some spheres, the benefits from the relationship with Germany are hard to perceive. It is clear from the nonplussed reaction of the Soviet aeronautical delegation to Berlin, for instance, that its members were expecting to see far more advanced technology than they were actually shown. After all, Soviet engineers had already independently developed both a delta-wing aircraft and a functioning prototype jet engine by 1938, which perhaps explains why their buying delegation was less than wholly impressed when the Germans showed them conventional, piston-engine examples the following year.

In other areas, such as precision machine tools, the benefit is much easier to divine. Soviet industry was endeavoring to close the gap with its rival economies via the third Five Year Plan from 1938 onwards, and the German connection can only have helped in that respect, despite the exports of raw materials that it demanded. Indeed, after plateauing through 1939, Soviet industrial production very clearly rose again in 1940, with a couple of sectors—such as high-grade steel—showing particularly impressive increases. Moreover, such advances appear to have saved the Five Year Plan, which, despite a poor start, was well on the way to being fulfilled and even overfulfilled by the middle of 1941. Although economic historians of the period rarely mention the German connection, it seems plausible to attribute these increases, at least in part, to the influence of the commercial agreements.

A clear—indeed a vital—benefit is perceptible in the area of military production. The Soviet tank industry is a salient example. Soviet tank production was in flux in 1940, with the obsolete T-26 and BT series tanks being phased out and production switching to the more modern T-34 and KV models. In addition, a simultaneous expansion of the sector entailed the building of new plants and the retooling of existing plants to produce the new models. A natural partner in these processes was German heavy industry, which could provide both the hardware and the know-how to assist, and the Soviets were not shy in exploiting this resource.

Starting in the summer of 1940, Soviet foreign trade commissar Anastas Mikoyan began submitting sizeable orders to German firms—such as Reinecker, which had been Europe’s largest machine tool manufacturer in 1939—for sundry heavy engineering items, including mills, forges, presses, and cranes. The KV factory at Chelyabinsk alone took over four hundred German machining tools, while an order from mid-July 1940 contained a request—worth 11.5 million rubles—for the import from Germany of 117 metal-processing tools, twenty-two presses, forges, and a complete bearing assembly plant. The collaboration was not confined to the tank industry. When Factory 292 was set up at Saratov in 1941 for the production of the mainstay Yakovlev Yak-1 fighter, it was established with 40 percent of its machine tools coming from Germany. And when factories were retooled at Kirov and Kharkhov in 1940 for the production of the M-30 and M-40 aircraft engines, nearly 20 million rubles were spent on machinery from German suppliers. Total figures and volumes of such orders will probably never be known, but it is surely no exaggeration to say that German engineering was one of the unacknowledged godfathers of the Red Army’s later military prowess.

For the Germans, however, the economic advantages brought by the connection with the Soviet Union are more difficult to discern. It is often lazily assumed, for instance, that supplies of Soviet fuel were paramount in German thinking. Certainly, the thirst for fuel shown by Hitler’s war machine would ultimately prove its Achilles’ heel, but one should be wary of projecting such problems back to the opening phase of the conflict. Germany went to war in September 1939 with over 2 million tons of oil stocks, and by the start of the campaign against the Soviet Union, in June 1941, that figure had dropped by only about a quarter. Total oil supplies from the Soviet Union, meanwhile, amounted to less than 1 million tons—that is, less than the monthly German reserve stock and barely 3 percent of the USSR’s total annual production—over that same period.

More significantly, perhaps, the Soviet Union was not Germany’s only source of oil; Hitler’s troops confiscated around 1 million tons of French oil stocks following the fall of France in 1940. Romania, too, put its oil wells at Hitler’s disposal, and with greater generosity than Stalin did, quickly emerging in 1940 as Germany’s most important supplier of crude oil. In the same period that the USSR supplied barely 1 million tons of oil to Germany, Romania supplied over four times that amount. Every drop would ultimately be crucial, of course, but the idea that Hitler was dependent on Soviet oil between 1939 and 1941 simply does not withstand scrutiny.

It’s a similar story with iron ore, essential for the creation of steel. The Soviets supplied Germany with 750,000 tons of it under the terms of the Commercial Agreement of February 1940, a figure far larger than those stipulated for other ores, such as manganese, chrome, and copper, though it represented less than 3 percent of Soviet annual production. Yet Swedish supplies of iron ore to Germany would dwarf those of the Soviet Union. A memorandum to a German-Swedish trade treaty in December 1939 noted that the projected Swedish export of iron ore to Germany in 1940 alone would reach 10 million tons, over thirteen times the total Soviet figure. Germany would get more iron ore from Sweden every month than it would receive from the USSR in over a year.

Rubber is another area of Soviet supply that appears to have fallen short of expectations. The importance of rubber to the modern military should not be underestimated, and Germany’s prewar supply came largely from British-controlled sources in Southeast Asia. Once war broke out in 1939 and those sources dried up, Germany hoped to source its rubber via the USSR, with the latter serving as a proxy buyer and transporting the goods to Germany.

In the event, Soviet-sourced rubber would be symptomatic of the wider shortcomings of Germany’s economic relationship with the USSR. Already at the outbreak of war, Germany was a world leader in the production of synthetic rubber, known by the trade name Buna and being produced in three plants. Heightened wartime demand, however, projected at around 9,000 tons per month, required alternative resources, mainly from the USSR. Yet Soviet-sourced rubber could not make up the shortfall. Soviet deliveries, totaling only 18,000 tons—less than Germany’s annual production of synthetic rubber—would barely ease the shortage.

In the circumstances, it is not surprising that German technocrats were keen to expand domestic synthetic rubber production, so in the winter of 1940 a new state-of-the-art chemicals facility was planned close to the little-known Upper Silesian town of Auschwitz. The resulting Buna Works and the associated labor camp at Monowitz, or Auschwitz III, as it became known, opened in May 1942, with the target production of 25,000 tons per annum. The plant would consume some 600 million RM of investment—a similar figure to the export trade associated with the Nazi-Soviet Pact—and around 30,000 lives. One of those who survived Monowitz was the Italian Jewish chemist Primo Levi, who later in life often recalled his experiences as a slave laborer in the factory:

One of the few areas where a tangible economic benefit to Germany can be discerned is in foodstuffs. Hitler’s paladins were highly sensitive to the issue of food supply, mindful as they were of the morale-sapping shortages on the German home front during World War I. Consequently, the Nazi regime was keen to shore up domestic morale by ensuring that food supply was prioritized, which it achieved through the setting of artificially high rationing allocations and by lifting restrictions on what German troops could bring home from abroad.

In this regard, the supply of Soviet animal feed could play a vital part, helping Germany’s farmers to maintain domestic deliveries of meat—an important influence on civilian morale. As a result, the supply of 1 million tons of “feed grains and legumes” from the Soviet Union was duly included in the February 1940 Commercial Agreement, an estimate later revised upward to 1.5 million tons, with a further million tons anticipated for the second year. Although German reserves remained stable at around 4 million tons for most of 1940, they dwindled rapidly in 1941, such that, by the middle of the year, Germany was effectively reliant on supplies from the Soviet Union. By that point, just as the Germans and the Soviets clashed on the battlefield, Stalin’s collective farmers were keeping Hitler’s people fed.

From the German perspective, then, the economic aspects of the Nazi-Soviet Pact were something of a mixed bag, with a few positives arguably outweighed by more serious shortcomings. This naturally would have been a profound frustration and disappointment to the Nazi regime, for Hitler’s negotiators had clearly entertained high hopes of tapping into the raw material riches promised by the Soviet Union. Realizing that ambition, however, had proved a more difficult prospect.

To some extent, Soviet negotiating methods, which one German participant described simply as “chicanery,” had stymied German ambitions. Moscow married exorbitant demands and unrealistically high prices for its own goods to constant haggling over the tiniest details, deliberate delays, and outright stubbornness. In addition, Soviet negotiators could be bizarrely unpredictable—uncooperative one day, genial the next—leaving their German counterparts often confused and frustrated. This, of course, was doubtless part of the plan, but there were also concrete reasons for such peculiar behavior.

First of all, mindful perhaps of the fate of many of their fellows in the great purges of the late 1930s, many Soviet functionaries showed a remarkable unwillingness to commit to any proposal or suggestion for fear that they might be treading on their superiors’ toes. As Germany’s negotiator in Moscow, Gustav Hilger, noted in his postwar memoir, “The negotiations were marked by the chronic suspicion of the Soviet negotiators and by the fear of responsibility even on the part of a Politburo member like Mikoyan; this in part explains the fact that it took four months of active discussions to come to terms.” Lacking a political lead, Soviet negotiators often preferred—whether subconsciously or by design—to allow talks to drift into discussions of minutiae or unreasonable demands and to await direction from the Kremlin.

That direction was usually forthcoming. As one German official noted, the “extremely difficult” negotiations repeatedly required the “personal intervention of Stalin to prevent a premature collapse.” Ribbentrop had appealed to Stalin to break the deadlock in the talks for the February 1940 agreement, and Soviet officials did the same to smooth their negotiations. General Yakovlev, for instance, dismayed by the amount of bureaucracy involved in any purchases earmarked by the Soviet delegation to Germany, was relieved to be able to cut through the red tape by cabling Stalin in the Kremlin, who promptly acceded to his request and ordered that no further difficulties were to be made.

For his part, Stalin certainly did not intervene out of altruism. Rather, he very definitely used the economic negotiations as a political tool, a lever with which to exert pressure on his German partner, smoothing matters when he wanted to appear conciliatory, ignoring matters when he did not. For many on the German side, this wider political link to the negotiations was patently obvious. Joseph Goebbels gave an example in the summer of 1940. At a time when German-Soviet relations were increasingly strained by the Soviet annexation of the Baltic states, Bessarabia, and Northern Bukovina, deliveries from Moscow suddenly began to flow, briefly meeting their quotas. As Goebbels noted in his diary, the connection was clear: “The Russians are providing us with more than we want,” he wrote. “Stalin is making an effort to please us.”

Believing that he held the stronger hand in the economic relationship with Germany, Stalin was also not shy about seeking to exploit that position in any way he could. His primary weapon in this regard was to demand artificially high prices for Soviet deliveries, while insisting on bargain-basement prices for German products. Soviet negotiators refused to accept the industry standard “Gulf price” for their oil, for example, insisting instead on a premium of at least 50 percent, which their German counterparts were obliged to accept. At the same time, the price for German deliveries of coal in the other direction was driven so low that Moscow was able to resell much of it at a healthy profit.

Another example is that of manganese, vital for the creation of steel alloys, which was one of the few commodities that Germany had already sourced from the USSR prior to the war. However, whereas Germany had paid 2.9 million RM for 60,000 tons of Soviet manganese in 1938, by 1940 the price for 65,000 tons had risen by 75 percent to 5.5 million RM. For communists, Stalin’s negotiators clearly demonstrated a sound understanding of the fundamental workings of capitalism.

In extreme cases, Stalin was not above resorting to more radical methods to get his point across. In September 1940, for instance, Mikoyan expressed his growing frustration at what he saw as German delays in deliveries and a generally unhelpful attitude from the Reich’s negotiators. Stalin reacted by simply halting the oil supply, in the expectation that such a move would swiftly cause his German partners to see sense. No new shipments followed for the next two weeks, and Soviet supplies for the month dropped to under half what they had been for August.

In his intransigence, Stalin arguably overplayed his hand. For, although he had been Hitler’s only viable option in the autumn of 1939, by the summer of 1940 Germany’s strategic situation had vastly improved, and a number of alternative suitors—occupied France, Romania, Sweden—could supply the Greater German Reich. In light of that strategic shift, Berlin’s perception of the relationship with the Soviet Union began to change as well, and Hitler’s economic advisors increasingly began to envisage a European economic area, with Germany at its heart, rather than an increasingly turbulent and unpredictable economic partnership with Moscow. Paradoxically, therefore, the more Stalin intervened, the less influence he would have.

Their capitalist flourishes and heavy-handed responses aside, the Soviets also had a few grievances of their own. For one thing, Stalin appears to have been particularly disquieted by the staggered aspect of the Commercial Agreement—by which Soviet deliveries were balanced by later German counterdeliveries—and worried that the Germans were behind schedule. Indeed, Soviet complaints were constantly aired about supposed German foot-dragging. Valentin Berezhkov recalled one such conversation with Gustav Krupp von Bohlen in Essen early in 1940. After complaining about the slow progress of the assembly of the Lützow’s guns and accusing Krupp of “violating the schedule” for delivery, he was told that “there are forces beyond our control.” Blaming the war and Anglo-French intransigence, Krupp claimed that he was doing his “patriotic duty” in supplying the Wehrmacht first of all but promised to look into the Soviet complaints and pledged to finish work on the Lützow as soon as the Prinz Eugen had been completed. This approach was certainly in line with the official instruction from Berlin that Soviet orders were to be given priority after those of the German military, but it is quite possible that it still gave ample scope for procrastination.

The Germans, too, could raise complaints regarding the progress of the Lützow, but on a quite different issue. As Nikita Khrushchev related in his postwar memoir, a German rear admiral, Otto Feige, was dispatched to Leningrad with the vessel to oversee the job of fitting her out. However, Feige soon attracted the attention of the Soviet intelligence service and a “honey trap” was prepared for him, involving a “young lovely,” an “indecent pose,” and some photographic equipment. Despite the ensuing scandal, Khrushchev claimed, the Soviet secret police failed to recruit Feige, as the brazen rear admiral “couldn’t have cared less.” Hitler, meanwhile, was said to have been most indignant and “raised a rumpus” with the NKVD chief, Lavrenti Beria.

While ideology would undoubtedly have added a certain spice to such confrontations, it was not the primary irritant. There were, in many cases, genuine economic or strategic reasons for either or both sides to feel aggrieved. In the Baltic states, for example, German companies had an estimated 200 million RM of investment in 1940, as well as a similar value in export trade in foodstuffs and fuel. However, with the Soviet annexations of that summer, those contacts were effectively severed and the markets and assets lost. Of course, when Berlin had negotiated the Baltic states away in the autumn of 1939, it had done so in the expectation that access to Soviet markets and resources would easily counterbalance such losses, but the reality was that it rarely did.

Berlin was similarly disquieted by developments in Moscow’s two newly annexed Romanian provinces, where its existing trade contracts, predominantly for lumber and foodstuffs, were promptly downgraded. Although Molotov had promised to respect German economic interests in the region, he informed Berlin after the annexation that the agreed-on grain export to Germany from Bessarabia for 1940 would be reduced by two-thirds. In such instances, Germany got the worst of both worlds: losing stable, reliable trading partners and having to deal solely with Moscow, which was proving an increasingly difficult and demanding client.

The frustrations ran both ways, of course. For one thing, Stalin’s pride would not allow him to let the USSR assume a subordinate position to Hitler’s Germany—as he put it, to become “Germany’s tail.” Yet, beyond that, the Soviets had many similar concerns to the Germans about the loss of their traditional markets and suppliers. By signing the pact with Nazi Germany, Stalin had so isolated himself internationally that Hitler’s was almost the only other state willing to do business with him. Whereas 60 percent of Soviet machinery and technology imports had come from the United States in 1938, for instance, those dwindled to nothing after the signing of the pact and the invasion of Finland late in 1939, with President Roosevelt even imposing a “moral embargo” on trade with the Soviet Union. The idea that Moscow was simply stringing the Germans along, therefore, intent on a bit of industrial espionage and military pilfering, simply does not correspond to reality. The Soviets had as much invested in the relationship, economically, as the Germans, maybe more so. Indeed, if anything, their intransigence in negotiating with Berlin was as much a symptom of desperation as of anything else.

In addition, where Nazi Germany and the Soviet Union were now sharing a border, new points of friction emerged. As the Soviet ambassador in London had confessed to Lord Halifax in September 1939, German military success had been a “great surprise” to the USSR, which was now concerned by the prospect of having a “powerful and victorious Germany” as her next-door neighbor. One of the resulting points of friction was the so-called Lithuanian Strip, a small parcel of land along the Šešupė River in southern Lithuania, which, but for finding itself on the fault line between two totalitarian rivals, would doubtless have remained in total obscurity. However, despite its being assigned to Germany in the September 1939 Boundary and Friendship Treaty, the Soviets annexed the strip wholesale, along with the rest of Lithuania, the following summer. When the Germans raised the issue in subsequent negotiations, Moscow offered to retroactively purchase the territory for around 16 million RM, to which Berlin made a counterdemand of 54 million RM, which Moscow duly rejected. As the talks descended into acrimony, Ribbentrop attempted to excise the issue from the wider negotiations, but the spat rumbled on, poisoning already fraught relations as it went.

The squabble over Bessarabia and Northern Bukovina would prove even more divisive. The Soviet occupation of the provinces, in the summer of 1940, caused profound disquiet in Berlin. Although Moscow and Berlin had agreed in 1939 to Bessarabia falling into the Soviet “sphere of interest,” when Stalin came to collect the following summer, his lieutenants demanded nearby Bukovina as well, which had not previously been slated to fall under Moscow’s rule, as “compensation” for historic Soviet losses at Romanian hands.

Stalin’s motives were complex. Russia had a long-standing claim to Bessarabia, going back to the Crimean War and beyond, and its annexation provided a vital depth of defense to the port of Odessa, which was only forty kilometers from the old Romanian frontier. But Stalin’s overriding motivation was that the annexation extended Soviet influence into the Balkans, with the ultimate goal—in echo of imperial Russia’s old nineteenth-century ambition—being to establish Moscow’s control over the Bosporus and the Dardanelles, without which the Black Sea was potentially little more than a Soviet lake.

However, such ambitions ran very much counter to Hitler’s desire to preserve the Balkans, particularly Romania, as his own economic and strategic hinterland. Romanian oil was crucial to Berlin, and as Hitler would confess to the Finnish leader Marshal Carl Gustaf Emil Mannerheim two years later, he had “always feared that Russia would attack Romania in the late autumn of 1940and occupy the petroleum wells.” Had they done so, he said, “we would have been helpless”: without Romanian oil, Germany “could not have fought the war.” Yet, beyond that, there was a broader strategic concern: Berlin interpreted Stalin’s move into the Balkans as a worrying westward shift, a challenge to Germany’s continental hegemony.

So, though Berlin did not object in principle to the cession of the Romanian provinces—indeed, it urged the government in Bucharest to comply with Soviet demands—it nonetheless lodged a protest with Moscow. In late June, Ribbentrop wrote a long memorandum to Molotov, via ambassador Schulenburg, reminding him that Germany was “abiding by the Moscow agreements” but that the Soviet claim to Bukovina was “something new.” Not only did Bukovina present complications regarding the local ethnic German population, he explained, but it was also close to Germany’s “very important economic interests” in the rest of Romania; consequently, Germany was “extremely interested in preventing these areas from becoming a theatre of war.” As concerns were raised in Berlin that Moscow was overstepping the limits of the 1939 pact and unilaterally demanding territories beyond the agreed-on spheres of influence, Ribbentrop’s memorandum was something like a warning shot.

Stalin’s move south went unchecked, however, and though condoned by Berlin, it nonetheless set alarm bells ringing and increased Hitler’s determination to ensure his own control over the region. What followed would be an unseemly scramble for the Balkans, in which Romania and Bulgaria would tumble from sovereign nationhood to become desperate clients and petitioners.

Romania was the first to implode. Following Stalin’s annexation of Bessarabia and Northern Bukovina, the government in Bucharest abandoned its previous policy of uneasy neutrality and actively sought an alignment with Germany, disavowing the Anglo-French guarantee of 1939, abandoning the League of Nations, and finally announcing her desire to join the Axis in mid-July 1940. Such obeisances were not enough to save her from her neighbors, however, as Bulgaria and Hungary both lodged territorial claims—to Southern Dobrudja and Transylvania, respectively—which were granted following German and Italian arbitration. The subsequent, and arguably inevitable, collapse of King Carol’s government—with the king himself fleeing into a life of exile—ushered in a tense alliance between a pro-German senior general, Ion Antonescu, and the homespun fanatics of the Romanian fascist movement, the Iron Guard. At the end of all that, shorn of its disputed territories and in political ferment, Romania slipped definitively into the German orbit. Bulgaria would be next.

BY THE LATE SUMMER OF 1940, THE GERMAN-SOVIET RELATIONSHIP was in trouble. Strategically, the two regimes appeared to be on a collision course. The mood of collaboration of late 1939 had shifted increasingly to one of confrontation, with growing suspicions on each side that the other was acting in bad faith. Typical in this regard, perhaps, was an NKVD assessment, drawn up for the first anniversary of the pact in 1940, which drew the following stark conclusion: “Intoxicated by victory, the German Government together with the Italians and without the consent of the USSR, violated the agreement of 23 August 1939 by deciding the fate of the Balkan peoples.” The irony and the root of the problem was that Berlin could just as easily have accused Stalin of the very same thing.

In economics, too, the relationship was faltering. Despite the not inconsiderable benefits that had accrued for both sides over the previous year or so, both Moscow and Berlin were feeling dissatisfied. The Germans, frustrated that the connection with Moscow was not bearing the rich fruit they had expected, were well aware that other sources, such as occupied France or Romania, were proving more bounteous than the USSR. The Soviets, meanwhile, knew that their relationship with Germany, turbulent at best hitherto, was in need of recalibrating to acknowledge the huge changes that the intervening year of warfare had brought. Trade, which both sides had regarded as an essential component of the political arrangement, had become merely an indicator of a deeper malaise.

Even the ex-Lützow, grimly symbolic of the relationship, was in difficulties. At the end of September 1940, though only two-thirds completed and moored in her dock in Leningrad, the ship was formally incorporated into the Red Navy and given the name Petropavlovsk, commemorating a Russian victory against the British and French in the Crimean War. However, in a microcosm of the wider problems, the tentative cooperation on board the ship between the German and Soviet crew and engineers had all but collapsed, with interminable haggling effectively paralyzing any genuine progress on finishing the vessel. The Soviets requested that their training be carried out in Russian, for instance, with specialist officers being sent to German factories for instruction. They also demanded that a Red Navy training detail should be permitted to serve aboard the Admiral Hipper. Unsurprisingly, the German authorities refused. Then, when an article appeared in the Soviet newspaper Izvestia in October 1940 outlining the historical background of a number of Soviet warships, including the Petropavlovsk, the vessel’s German origins were not mentioned. The cynic might have surmised that the Nazi-Soviet Pact was already being airbrushed out of history.

In such circumstances, it naturally fell to Ribbentrop, as one of the progenitors of the Nazi-Soviet alignment, to attempt to revivify it. In mid-October, he addressed Soviet concerns with a letter sent to Stalin personally, in which he advocated inviting Molotov to Berlin for talks preparatory to a revision of the pact through a new “delimitation of mutual spheres of influence.” Stalin was evidently relieved by the invitation, smoothing a number of ongoing squabbles before replying with the hope that relations between the two would thereby be improved.

Molotov, meanwhile, was thoroughly briefed. His primary goal was not necessarily to secure an agreement, as Moscow saw the Berlin talks merely as the opening bout of a new round of negotiations; rather it was to divine Germany’s “real intentions” and the possible role for the USSR envisaged in Berlin’s “New Europe.” Furthermore, he was to ascertain what Hitler foresaw as their spheres of interest, both in Europe and in the Near and Middle East. Most importantly, however, Molotov was to express Moscow’s dissatisfaction with developments in Romania and address wider Soviet security concerns in the Balkans. “The main topic of the negotiations,” Stalin told him, was to be Bulgaria, which “must belong by agreement with Germany and Italy to the USSR’s sphere of interests, on the same basis as had been done by Germany and Italy in the case of Romania.”

Clearly some tough negotiations were in the offing. But it is telling that Stalin’s instructions to Molotov still stressed the principle of working in concert with Nazi Germany to achieve the Soviet Union’s strategic goals. For all the bluster and opprobrium, it appears that—from Moscow’s perspective at least—the Nazi-Soviet Pact still had some mileage left in it.