Created: 3/28/1950

OCR scan of the original document, errors are possible



SUBJECT: Trade Between East and West Germany

Commercial and Industrial trade between West and East Germany continues to Increase outside the interzonal trade agreement despite efforts by the occupation authorities to enforce the export control program. Federal authorities in West Germany display little desire to cooperate in halting tills extra-legal trade, which is already larger than that legally authorized, and border controls areMeanwhile, West German industrialists apparently believe not only that extensive trade relations can be developed with the Soviet orbit, including China, but Out West Germany cannot exist without tills trade. (Actually, West Germany's prewar trade with the East only amounted to approximatelyercent of Its total foreignhis West German belief is presently being fed by such factorsesentment over stricter application of LA and IB controls to West Germany than to other ECAhe non-competitive nature of the Eastern markets compared with those tn thehe greater availability of certain foods and raw materials In the East;he hope that East and West Germany will someday be reunited.

V fftj

H East-West German trade continues to escape strict official scrutiny and control, the US will lose the ability to cut off shipments to me German Democratic Republic, at present an important US bargaining weapon tn negotiations with the USSR on the security of Berlin and access to the city. Other effects of this Illegal trade will beontribute to the fulfillment of tbe East German Two-Tear Plan and to the war potential of the Soviet orbitccelerate lie attainment by East Germany of economic Independence of the West by Western exports of much-needed capitalmprove gradually tho living standards of the East Germans, who will then be less inclined to resist the Communistivert capital goods that could be used In the West;rovide propaganda material for German unification to the National Front in East Germany aad to ultra-nationalists in West Germany, many of whom favorodus Vivendi with the USSR.

Dooumont Ho.

Original document.

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