Vera Asenovavera Submitted to Submitted German By

CEU eTD Collection

The Case of Bulgaria in the in Bulgaria of The Case In partial therequirements theIn of fulfillment Doctor of degree for of Philosophy Doctoral School School PoliticalPublic Science, Doctoral of Policy International Relations and Small State Autonomy in Hierarchical Regimes. Small State Regimes. Autonomy Hierarchical in Supervisor: Prof. Julius Supervisor:Prof. Horv Influence 1933 Influence Central EuropeanUniversityCentral Budapest, Hun Budapest, November 2013 November Vera AsenovaVera Submitted to Submitted German By

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and Soviet Spheres of Spheres Soviet and á th th

CEU eTD Collection ………………... AsenovaVera the f by person, published another whereexcept appropriateacknowledgementis inmade institutions. any thesiscontains and/or previously other written The no materials thatherebyI thethesiscontains state no materials any accepted for in other degrees orm orm of bibliographical reference.

Statement ii

CEU eTD Collection small state the has is usually more agency it in than the literature. assumed termbenefits extract cooperationshort economic withfrom hegemon. the including form softer a took gradually concessionssphereeconomic itsinfluence. to of and exploitation economic and occupation power Soviet during WWII. exploitation economic and power hard to evolved which cooperation, economic attract to 1930’s power. their legitimize to time in points autho on relied regimes Soviet the authority. international build and rule their legitimize to order in states B restrictive trade. very two administered are These of 1950’s. regimes early the in (CMEA) Assistance Economic regimes throu is examined structural continuitiesresultthat cooperation. the international from actors local with and governments relationship between anddomestic isabout the international andquestion hierarchies foreign with relations in gains economic cooperation. the by utilized the also is in l authority state but state, small hegemonic the the by with granted interaction of is course Authority 2009. Lake, by defined as relations po short long the and goals discusses economic It regimes. trade international administered of the framework in state big a and small a between cooperation international studies thesis This te i odr o trc sal ates n t cet pstv epcain from expectations positive create to and partners small attract to order in atter litics of small states. A central concept is the concept of authority in hierarchical hierarchical in authority of concept the is concept central A states. small of litics In both cases both aIn authoritythe had smallstate certain degreewas of able to and institutions domestic and authority foreign between relationship contested The is question research main The

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the German economic sphere in the 1930’s and the Council for Mutual Mutual for Council the and 1930’s the in sphere economic German the oe onre o tee regimes these of countries core

gh theinternational Bulgaria experience of twotrade under different - term institutional effects of international rules on domestic on rules international of effects institutional term domes tic iy o dfeet xet n ue i a different at it used and extent different a to rity how do small states trade their own authority for authority own their trade states small do how economies Abstract at the end of WWII was in the form of military military of form the in was WWII of end the at Nazi Germany used soft power in the early the in power soft used Germany Nazi iii

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CEU eTD Collection Tr The Chapter 5: Bulgaria in Corporatism of Regime Effects Structures:Chapter State 4: the Clearing on Domestic Institutions Bulgarian Chapter 3: Literature FrameworkChapter 2: Theoretical Case Review, and Selection Soviet Union 1949 International The Chapter 1: Trade ofGermany Regimes 1932 Introduction 1956 and Case German ofBulgaria in the The Soviet ofInfluence Spheres 1933 Autonomy State Small Regimes. Hierarchical in 5.2.From Foreign Trade Isolation Foreignto Trade Reorientation 5.1.Transfer of theAssets German Sovietto Possession Conclusion 4.2.State Corporatism Bulgariain 1932 4.1.Bulgaria and Germany Hierarchicalin Relations Conclusion 3.5. 3.4. 3.3. 3.2. 3.1. Conclusion 2.4. 2.3. Economics inHard Times? 2.2. 2.1. Conclusion A1.5. CaseInternational of Trade Regime Continuity 1.5.Puzzle and ResearchQuestion 1.4. 1.3.Different GlobalConditions 1.2. 1.1. 4.2.2. Theinterests of exporters 4.2.1. Theorganization of foreign tradein Bulgaria 2.3.3.Bulgaria in the German economic sphere 2.3.2.Romania in the Germaneconomic sphere 2.3.1.Yugoslavia the in Germaneconomic sphere 1.2.4.Security 1.2.3. Ideologyand institutions 1.2.2.Raw materials and autarky 1.2.1. Internationaldivision of labor 5.2.1. Thechange ofpersonnel

......

Theoretical TheEast Small European States Definitionof Smal SimilarEconomic Means DefiningBilateral Clearing Financingof Exporters and InflationaryEffects GrowingGerman Influence EstablishingBilateral Trade Relations Bulgaria TheGreatDepression in Bulgaria and Germany TheGerman Offer Eastern for Europe in 1930’sthe DifferentPolitical Ends WartimeEconomic Relations

......

...... ansition to fromGerman Soviet Hierarchy 1944 - Framework 1956 ...... - German Relations German

lStates in Hierarchical Relations ......

......

...... Table ofContentsTable

......

...... - 1 v ...... 939 ...... –

......

F ......

oreign Sources ofDomestic Sources oreign ......

......

...... - ......

Germany1931

......

...... – ......

...... Economic Exploitationor ......

...... - ...... 1939 and the and 1939 ...... - ...... 1956 - ...... 1932 ......

......

...... – ......

. 141 116

150 143 139 125 117 114 112 106 156 134 126 .

13 90 50 48 45 40 36 33 23 15 98 95 91 89 78 61 53 51

32 27 26 24 73 68 65

i i

CEU eTD Collection References: Conclusion Conclusion 5.4.Institutional Fram 5.3. 5.2.2. Thechanges of trade structure

TheOrigins of the Council forMutual Economic Assistance

......

...... eworkof the CMEA ......

...... vi

......

184 177

1 170 165 162 75

CEU eTD Collection clearing The Figure the account and in 8. of levs.the BNB free million AsymmetricFigure dependen trade 7. ofIndices wholesale Figure cost and prices 6. living. of BulgariaMoney circulation in Figure in million levs. in 5. Germany'sFigure to clearing Yugoslavia, 4. debt 1934 in Germany'sFigure th share 3. Imports Figure from 2. Germany percentages as of total imports. Exports toFigure Germany 1. total percentages as of exports. 14. Five Patternsof Table Trade EastCentral European 13.Money Table theincrease circulation and in reichsmarks of blocked the in Table 11. share Table The importsofGerman exports and in 10. Free Table accountThe 1936 9. Foreign exchange Table BNB balance of in levs.million 8. Foreign Exchange Table Flows 1932 7 Table 6. Foreign Reserves Table 10.1929Bulgaria, of 5. Shares Table of 4. Money Table CirculationBulgariaGreatDepression. in duringthe 3. Germany's withTable debt Yugoslavia, clearing 1934 2. with Germany's Table Southeastern 1929 Trade Europe, 1. Table ofTrade.Terms of Tables and FiguresList percentages of total trade in oftotal tradepercentages in 1938. clearing account, 1940 trade.

12.Indices wholesale cost of prices livingand of ( . Foreign reserves,. gold ...... CMEA trade and USSRCMEA and trade trade in trade total socialis of ......

–

09/30/1944.

e trade of foreign Southeastern Europe as cover -

1938. age ce,Bulgarian Germany to exports 1938 in

...... -

......

1934. vii ...... ratio and trade and ratio balance, 1927

...... -

02.1930.

...... total clearing total in total trade and -

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the year=100) 1929 the 1938. - Countries, 1937

1938 (in 1938 dinars) million ...... -

1938.

......

...... - t countries t

- 1939.

1952 ......

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110 104 103 101 122 121 111 109 155 113 .

. .

93 87 66 62 57 66 64 63 63 99 92 76

CEU eTD Collection USSR SEE RB RM Gosbank EI EC EE DB Comecon CMEA CPRO CPE BNB BCR BGN Abbreviations ofList – – – – –

– Export institute

– – – – Eastern Europe – Reichsbank exchange control Deutschebank reichsmark

– Southeastern Europe – – centrally economy planned Bulgarian Bank National Bilateral clearing regime B

The The ulgarian national currency,lev Council for MutualCouncil Economic for Assistance Central Public Recor – –

the central the of bank Council Mutual Economic for Assistance Soviet Union

–

the central bank of Germany Reich Third duringthe

ds Office, the Office, state ds archive Bulgaria in

Soviet Union viii

CEU eTD Collection regimes. It international power. hegemonic regional of durability and continuity the for ofvital is cooperation states’ small that hypothesizes change drastic across sustained continuity 1950’s early the in Union Soviet the and 1930’s of smallpolicies states non in they adj how and states industrial advanced on focus states small of position the on for motivations their works Major incurred. states, costs and pursued interests regimes, international dominant introducing of positions the studying field of economy po examples international the some in scholarship are abundant Africa is There and regimes. Asia administered East with trade regional China’s day 1949 Union Soviet the by led market socialist the 1930’s, the in bilateral non on in or kind in operates are payments where regimes basis clearing of type second The regimes. are liberal Standard of Gold examples classical the and currencies convertible in trade multilateral multilateral a in borders across and types regime basic two are There sectors. and regions between and across politics. domestic affect all which neither are Regimes states, within structures incentive the alter also cooperation relationships interdependent states. among economic theyThey produce regimes trade and Monetary Introduction s t goa mres u rltvl ltl rsac i dvtd o h economic the to devoted is research little relatively but markets global to ust

administered administered This thesis looks at the bilateral clearing regimes advanced by Germany in the the in Germany by advanced regimes clearing bilateral the at looks thesis This

regime types. The first allow for the free flow of capital and goods and capital of flow free the for allow first The types. regime diinly ml sae’ loy states’ small Additionally - inclusiv - liberal regimes.liberal r nt oiial nurl B fclttn international facilitating By neutral. politically not are e nor truly global rather concurrent regimes function regimes concurrent rather global truly nor e amns ytm Te oiat eie of regime dominant The system. payments 1

. It asks the question how was regime regime washow question the asks It . ly eiiie te eie s a as regime the legitimizes alty - conve rtible currency. Germany Germany currency. rtible - 91 n present and 1991 -

liberal litical CEU eTD Collection (1989). Clark and (2009) Spryut and Cooley (2009), Lake on is based 1 not sought be should power hegemonic regional the of change the after continuity its reaso The trade. international of regime continuous one as seen be to enough similar were exchange international of rules the partners trading European East their ways very two in used and leaders regional different two by clearing promoted bilateral regimes the take I it, promotes which country, core the of those not and itself regime the of characteristics the forward bring to order In structure. economic bu polity foreign a by imposed much so not is choice their on limitation the that demonstrating by subordinated invariably are states small that assumption inpolicystate the international dilemmas of framework small the understanding to contribution a makes project the observations, these by economies. domestic their over authority of degree sufficient a retain they some up give to resour for exchange in ready policy economic over authority are They authority. external an reference often politics (Ikenberry,2001). t and exploitation economic for opportunity marginal a forgo to ready are countries core the authority, positive this secure to order In polity. foreign entire an over influence as counts friendship political their time same the at are economies small states, abs among to easier are they because states powerful to attractive equality legal of system international an In particular. in leader regional or global as position state’s dominant the and whole

The framework of hierachy in international relations and definitions of sphere of influence that I follow follow I that influence of sphere of definitions and relations international in hierachy of framework The hs rjc dfes rm eedny hois n ht t os eod the beyond goes it that in theories Dependency from differs project This domestic their and markets external on depend hand other the on states Small -

the regimes of Nazi Germany and the Soviet Union. From the point of view of of view of point the From Union. Soviet the and Germany Nazi of regimes the

ces or access to markets. Yet, markets. to access or ces and domestic hierarchies rsri ter w power own their restrain o

orb as economic partners economic as orb t by domestic by t Motivated

different different ns for ns . 1

CEU eTD Collection opera economic over control economy, the exist an alternativetheglobal as to market. which regimes, trade international other for and definition this under states small day present for relevant is analysis The states. democratic less and industrialized less industrialized advanced of including general context in states small to applicable is the meaning central their democracies, in developed were dimensions these markets”: world in states “small of model Katzenstein’s of dimensions three the along studied the in opportunities and threats economic between but systems or ideologies alternative between rarely are choices it. within actors domestic the and state small acquiring for exchange in states small the international authority. to benefits economic extend to selfof institution le international the to rules of form the in preferences its upload or gains state, economic extract small to the ability its of by measured power bargaining relative the is varies What period. studied where regimes clearing Unio Soviet bilateral the and Germany the analyze I First (principal). state dominant the and (agent) state small the between relationship hierarchical the is level first The which itself, operates across differences.ideological clearing mechanism a in dyad but countries a of relationsbetween trade simply the in h scn lvl of level second The unfolds analysis The In the period of Germany of the period In tt centralization state - restraining hegemonic power within which the dominant state is ableis state dominant the whichwithinrestraining power hegemonic

in two levels using an adapted principal adapted an using levels two in h suy ok a atoiy s eoitd ewe the between negotiated as authority at looks study the , - n hold constant positions of principals throughout the throughout principals of positions constant hold n dominated foreign trade the state increased its grip ongrip its increasedstate the trade foreign dominated oitl centralization societal otx o dmsi pltcl struggles. political domestic of context e. h bltrl laig eie s en s an as seen is regime clearing bilateral The vel. 3

tions became more centralized but at the at but centralized more became tions

o te ml cutis h political the countries small the For

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Although . They are are They CEU eTD Collection are choices These crisis. of times in itself for makes of state case small a a which nevertheless choice, is Bulgaria of case the authority, political foreign strong a into tie religion Orthodox and culture Slavic its of closeness the and Empire Ottoman king long Bulgarian the is the Russia of Ferdinand. motherland the as least c not higher and of superiority epitome technological the is Germany period Interwar the During Bulgaria. and states likelycore mostchoices accept to whichnot advance did its interests. bargainin weak a in payments was it of indebted heavily balance and chronic problems with Depression, Great the by hit hardly industry, under economically small, geographically the on ofcooperation mode between thetwo. dependent process a rather was It state. small the by big the of economy political domestic the of emulation an or institutions domestic of imposition foreign of mechanisti a not is models foreign of adoption the that concludes analysis societal centralization, command hierarchical state a and higher centralization observe we period previous the to relation defin goals political the executed who agents as served actors decentralization societal and acentralization policy within corporatist network. loo economy political domestic The principal. the as seen are groups interest These negotiations. international at demands their of some advanced and groups interest domestic of agent an as acted state the time same

deep ugra s hsn s cs o a small a of case a as chosen is Bulgaria (1944 period second the In n diin oh emn ad usa no taiinly ih euain in reputation high traditionally enjoy Russia and Germany both addition In - etd rtel sniet Aant h od o eooi wans and weakness economic of odds the Against sentiment. brotherly seated - wie lbrtr f h Blain epe rm the from people Bulgarian the of liberator awaited - 1956) the state itself was the principal and domestic and principal the was itself state the 1956)

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CEU eTD Collection was regime trade establishedforeign in tenyears priorto fact it. their of terms for in importance exports and imports controls effect in also but currency foreign and national of outflow and inflow the only not control to has bank central the trade c same the in only out. balance to are countries of pairs between money international of absence the in facilitated is trade convertible in and currency payments receive exporters where system, payments multilateral the and trade free Unlike bilateral arrangements. trade the alternative defining against regime by clearing off sets It observation. process causal of methodology t uses and case historical single a with processes sequential on focuses It testing. the and two a has It level. international domestic the both Europe at Eastern economy political South with of history economic region combines the of studies historical to relevant also puzzle familiar a to speaking argument thepartagency for on the making thesis a ultimately is regimes It state. small the international within made choices on in depends cooperation borders) own their over often (and borders small of case econo limited with countries the in even that demonstrates thesis are The they studying. worth but choices cooperation economic external to response in sector trade foreign its to limited The project addresses the International Political Economy scholarship by by scholarship Economy Political International the addresses project The

oetc pee n rltd o h isiuinl raiain f the of organization institutional the to related and sphere domestic s rl ae re o pn i i dfeet onre, iaea clearing bilateral countries, different in it spend to free are rule a as h ntoa eooy Wa bcm te om ne a Communist a under norm the became What economy. national the ountry where they sell their goods. In order to facilitate this kind of kind this facilitate to order In goods. their sell they where ountry mic resources and no political influence outside their owntheir outside influence political no and resources mic – -

step structure step the continuity of a regime after decline of power. It is It power. of decline after regime a of continuity the of of the small state. 5

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economic history narrative and theory theory narrativeand history economic

Exporters can spend their revenues their spend can Exporters

exports and imports

and he CEU eTD Collection imitation an as seen not is which Bulgaria, in model corporatist state a of emergence theopted latter. for expor the paying for cash counter for waiting between choice the had Trade of Ministry the and Bank Central Bulgarian consumption. German credited w the despite and balanced not was however, trade, The materials. raw industrial and equipment military machines, exchange in imported and prices world than higher at vegetables Germany on dependent trad imposed most and had earliest which the was Europe, Bulgaria controls. Southeastern exchange in countries the with agreements different under monetary rules. country leading a by advanced blocs, regional of number a within proceeded trade or international and Britain) (France) (Great preferences tariff on based Standard trade bilateral organized Gold the on remained powers European Other countries. currencies domestic the in cleared agreements bilateral or and exporters, importers between compensations immediate barter, of form the in continue only could trade international conditions these Under exchange. foreign into currency conv the and trade international in currency foreign of use the limited which controls, exchange of introduction the was countries European most in devaluation and flight capital against measure immediate The economy. open global payments and trade regional when Depression Great n prnr I sple arclua gos ha, oac ad ae fut and fruit later and tobacco wheat, goods agricultural supplied It partner. ing ewe 13 ad 95 emn iiitd nme o bltrl clearing bilateral of number a initiated Germany 1935 and 1932 Between the during emerged regime the of development the follows further project The cetn Gra atoiy n bltrl laig eain rsle i the in resulted relations clearing bilateral and authority German Accepting ritten agreement Bulgaria often exported in advance of payments and payments of advance in exported often Bulgaria agreement ritten

es r o iac te truh self through them finance to or ters

- imports from Germany to supply the needed the supply to Germany from imports 6

ragmns elcd the replaced arrangements - generated means. It It means. generated riiiy f domestic of ertibility

of the two two the of CEU eTD Collection regim Communist the Under centralization. pre societal the and state of level the from in differed regimes domestic significantly The period. Communist change not did partner trading view of point the From period. socialist the of end the until so remained for and Assistance Council Economic Mutual the of principle organizing the as uninterrupted operate to continued the on Union no with success. countries Southeastern neighboring with trade of multilateralizing partial raw the secure to order materials in Union Soviet the with agreements clearing bilateral signed Bulgaria 1940 in Already partners. trade international its diversify to Bulgaria state an imitationbut as of the fas the that means state totalitarian Nazi the This of imitation from not resulted Bulgaria outcome. in model corporatist desired the received often and network and demands the interests; their served exercise were criticisms it that demanded and state the with disagreement expressed They counterparts. German their then freedom of degree a high as to not but state the ofsociety.centralization of centralization higher a to evolved Bulgaria in regime domestic the “model”, German the to Compared demand. external as well ec Nazi the of The contested relationship to German authority is evident from the attempts of attempts the from evident is authority German to relationship contested The higher a had Bulgaria in groups societal that is findings research the of One olwn te n o WI Blai roine is rd twrs h Soviet the towards trade its reoriented Bulgaria WWII of end the Following

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mainly coal and gasoline that Germany failed to deliver. It also pursued also It deliver. to failed Germany that gasoline and coal mainly basis of the 1940 bilateral clearing agreement. The same trade regime trade same The agreement. clearing bilateral 1940 the of basis onomy, rather a reaction to it and a consequence of domestic input as as input domestic of consequence a and it to reaction a rather onomy, d openly and in a formal way within a state corporatist policy policy corporatist state a within way formal a in and openly d

f ugra the Bulgaria of cist economic cist economic inmodel closewithand cooperation it.

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CEU eTD Collection clearing bilateral democrati non for typical change and continuity of processes on ideological light sheds different It frameworks. within and logics economic different of on spheres operating different very influence two in position state small the of comparison a is here This 1978). keyagency to explaining isthe continuity. regime (Gourevitch, exist” to it allow (states) they because exists “it (1975), stat of result the is interdependence that and abroad authority assumption realist a with line in agency shifting of evidence as seen are allocation domestic Both resources. domestic of allocation arbitrary struct a in locks rigidity economic under advanced, less of case the in that is thesis the of conclusion The states. industrialized advanced flexibi economic and stability of “mindset” lasting a qualityevading and competition upgrading. and structure economic rigid a in resulted This fre currency. the on goods competitive few the sell to aiming and items selected similarly for the clearing under to them goods exchange and quality countries low “friendly” the direct to was exporters for structure incentive The t international the of logic on underlying the shape surface, taking were structure domestic of changes visible these while But increased. also society of centralization addition in but War the before than greater In his “Small States in World Markets” Katzenstein describes how political political how describes Katzenstein Markets” World in States “Small his In eie epann rgm cniut ars pwr hfs ti aayi o the of analysis this shifts, power across continuity regime explaining Besides suggeste periods two the in regimes clearing bilateral the of comparison The c under - - industrialized in states relationto small a biggerpartner. trade nutilzd n non and industrialized e se per

s eeat o rsn dy China’ day present to relevant is iy rdc a opttv dmsi srcue in structure domestic competitive a produce lity r o preul rnfr f uhrt ara and abroad authority of transfer perpetual of ure - e policies not the other way around Gilpin around way other the not policies e 8 democratic states political instability and and instability political states democratic

rade remained unaltered for decades. for unaltered remained rade

mre fr convertible for market e tae eain with relations trade s

d - CEU eTD Collection the by and 1930 the in Germany by advanced practice the Area, Sterling the with clearing the as such practices, other unlike that argues and occurrences historical the active of cooperation the states small partner Southeastern Europe. in with next the to regime international previous a from but sphere international is approach spre alternative regime the an that is and hypothesis The suggested. evidence historical of view in insufficient be to found is sphere international the to domestic the from spread control totalitarian that first theor is the of regime view of same point the the from approached use they did why question The substance. in different while form institutional their in similar were regimes the that concludes comparison internation same the used hegemons regional two the differences many despite that demonstrating Union Soviet the and theopportunitiesto and points also It ends. currency convertible in trade multilateral of regime dominant the where operate to starts which “shadowregime” a conceptualization of a offers project system. trading multilateral the skirting of mechanism important an is and Iran and India Iran; and Turkey neighbors; Asian East its and China by also practiced is countertrade non of regime a of continuity the by underwritten is that change structural a China, of influence of socialist theUSSR democracies thesphere influence thesphere andthe of to from resource Chapter one provides a comparison of the clearing regimes of Nazi Germany Germany Nazi of regimes clearing the of comparison a provides one Chapter analysis the Taking hpe to ok it te hoeia dsuso o bltrl cleari bilateral of discussion theoretical the into looks two Chapter

- rich count rich - comp ries in Africa. Some of these states can be seen as transitioning as seen be can states these of Some Africa. in ries ttv ad non and etitive limitations smalllimitations states relation in to face external authority.

ak o h mco ee o te nentoa sse, the system, international the of level macro the to back al trade regime with Southeastern Europe. The Europe. Southeastern with regime trade al - market 9

- based trade. This kind of bilateral bilateral of kind This trade. based o ttltraim Te explanation The totalitarianism. of y d o fo te oetc o the to domestic the from not ad

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CEU eTD Collection for Council the of session founding the During assistance. economic socialist and frie eternal of rhetoric communist and through bureaucracy legitimized communist the by defined were interests national its and state Bulgarian the case this in but politics domestic in role decisive a relati play to continued hierarchical new a in power Soviet to German from transition the traces It another. to power of center one from shifts was 1930’s the qualitatively of corporatism State argumentation. economic was with trade foreign legitimized over control state nationalism and economic justified was of Germany framework on dependence discursive the In circles. professional the po and enabling as perceived largely was organization trade in role its and interests economic domestic of agent an as acted still institutions and policies the as understood context this in state” “the that demonstrates chapter The payments. in fore over monopoly state and changes corporatism state emerging the Bulgaria, institutional domestic the discussing then and partners small exploit to ability potential its and Germany of position economic strong the over debates the 1932 period the in Germany 2009) (Lake, rule” or influence legitimate a of recognition in autonomy security or economic certain state small the where relationship a but capabilities, material of distribution uneven with state small a and big a between relations simply not are case this in relations Hierarchical dissertation. the of rest the of framework theoretical the defines chapter trade regime. The a specific constitutes but currencya bloc CMEA isnot hpes he ad or eosrt te eain bten ugra and Bulgaria between relations the demonstrate four and three Chapters Chapter different from state monopoly thesocialistdifferent in period.from .

ie look five s

t ht apn t te uodnt sae we authority when states subordinate the to happens what at - 1939, first focusing on the question of of question the on focusing first 1939, 10

onship after 1944. Foreign authority authority Foreign 1944. after onship dhp ih h Sve Union Soviet the with ndship

external authority, authority, external ign trade and trade ign

“gives up up “gives sitive by by sitive also

CEU eTD Collection influence Nazi the discussing when assumed usually is it than policy economic over autonomy more have states small cooperation peaceful of context bloc trade socialist founding the the of meetings at arrangement this demanded actively but policy this of recipients passive not were states small the However, bloc. socialist the from prices world than wil was (CMEA) Assistance Economic Mutual for Council the post plan for economic Nazi the to Similarly rates. exchange and prices trade foreign managed administratively the had economies competitive least The states. trad working and developed to offer. model foreign in expertise bureaucratic already low an had countries European Southeast the of bureaucracies the organization, very had Union Soviet the while bureaucracy the through works transfer policy of mechanisms the of One regime. clearing bilateral the of adoption the for factor of major a as lack it interprets and this capacity demonstrates chapter The 1930’s. the in as efficiently as sector trade foreign the organize to able not were and professionals trade foreign experienced not were those party.However Communist the to loyal cadres, new with the of elite economic and political The placed. be easily could goods quality lower where competition external for closed bloc trade a materials, raw of deliveries and markets guaranteed exports, its for prices high artificially 1930’s: op in were that mechanisms same the for argued Bulgaria formally, established were arrangements institutional its when Assistance Economic Mutual Additional explanation for continuity is the preferences and interests of the small interests the of and explanation preferences continuityAdditional for isthe .

- war Europe, the Soviet Union at least in the beginning ofbeginning the inleast at Union the Soviet warEurope, –

h CE. h tei conclud thesis The CMEA. the 11

ot o an rm sse of system a from gain to most n Sve shrs of spheres Soviet and ling to buy at higher higher at buy to ling 1930’s was replaced replaced was 1930’s eration during the during eration s ht n the in that es bureaucratic e –

CEU eTD Collection po the of part as markets hierarchical in international states small of theory of development the to contributes analysis the while research archival original and history economic case a as it studies and regime trade single a constitute to two the between similarities outset the at interprets thesis the regimes, hegemonic different two as viewed be can which historical long as partners trading they couldreach agreement. as bilateral blo political the chose not could they War World Second the of end the After institutions. and structures economic own its of combination a by limited was market clearing Ho government. Soviet the to Bulgaria in accounts Reich’s the from and 1930’s the in wasin resources Bulgaria transfer the Reich important occupation. from of the to War war of time the during extraction of instances the from distinct is which exchange, wever, I demonstrate that the extent to which a country participated in the bilateral the in countryparticipated a which to extent the that demonstrate I wever, c and the security alliance they became a part of, but they could chose their their chose could they but of, part a became they alliance security the and c h mtoooy ue s cua poes bevto wti a particular a within observation process causal a is use I methodology The an cooperation willing of act an is trade treat I thesis the Throughout case. Although there are elements of comparison of two historical cases, historical two of comparison of elements are there Although case. of continuity. The historical narrative relies heavily on contributions from contributions on heavily relies narrative historical The continuity. of iia eooy literature. economy litical 12

d CEU eTD Collection political the of promoted that regime it collapse the after continuity and development its regime, trade the of emergence the for reasons the explains It regime. international hierarchical of case relatio hierarchical in states small of choices policy the especially understanding politics, international in order of theories of i spheres their in cooperation economic peacetime organized they how question The limited. very are Europe Eastern of countries with powers hegemonic two these of relations economic international the of studies comparative However, War. the during exploit economic of question the to dedicated is research Much 1991). (Temin, comparatively studied been also has 1930s the in planning Economic cases. 1995) (Eichengreen, 1948a); 1948, Hutchison. and Sovie (Eucken Nazi the the and 1974) in Holzman, economy domestic the of organization different the investigates literature systems economic comparative The 2008). Tooze, 1977; (Milward, compared been also have antagonists WWII two the of efforts mobilization (Geyer revision critical a undergone has totalitarianism 1964; Friedrich, of concept the Recently 1950). Popper, 1993, 1979; Adorno, 1956; Brzezinski, and Friedrich (Ahrendt, conceptualized extensively been have regimes of view of point the From times. many compared contrasted and have regimes Nazi theSovietUnion been of political GermanyThe and nfluence israrelynfluence a in comparative asked context. Chapter 1: The International TradeInternational The 1: Chapter Germany of Regimes ecfl oprto hr i suid o te ups o dvlpn existing developing of purpose the for studied is here cooperation Peaceful 1932 - 1939 and the Soviet Union 1949 Union Soviet the and 1939 –

the Third Reich. Third Reich. s Te hss tde bltrl laig rd a a as trade clearing bilateral studies thesis The ns. 13

Central EuropeanUniversity,Budapest

h ter o ttltraim these totalitarianism of theory the

and Fitzpatrick, 2009). The war The 2009). Fitzpatrick, and - (onti, 1965; (Bornstein, t 1956 Vera Asenova

ation

CEU eTD Collection three Part puzzling. appears regime conditions trade economic global different of out emerged same regimes these that demonstrates the of use the which of view heg two the by pursued ends political different the describes two part regime; Europe.Eastern U aims political and structure domestic ideology, in differences many the despite that demonstrates It continuity. its future to contribute can in which the research field. cases, historical of interpretation an present offers The thesis effects. political important has clearing bilateral today, trade world of a covering Although currencies. convertible in system trading multilateral the to alternative main the is and Iran and India Turkey; and Iran between neighbors; Asian East its trade withChina’s in used also is it oil; African of import the in especially 1991. and allocating bloc, socialist the 1948 between world within the of part considerable a within products finished payment and resources of method dominant the also was dolla US the on based system payments multilateral the with it replaced agreement Woods Breton the before and Depression Great the after Europe in transactions trade post the in established oper 187 standard, the gold from classical approximately the as such payments and trade international in rae a iia mntr ad rd rgm wt ter rdn prnr in partners trading their with regime trade and monetary similar a created nion iaea cern i crety sd y hn i tae ih fia countrie African with trade in China by used currently is clearing Bilateral for arrangements other from different qualitatively is regime clearing bilateral A h catr s tutrd n or at. at n dfns h bltrl clearing bilateral the defines one Part parts. four in structured is chapter The of evidence historical the establishes and regime the defines chapter current The

- war period. It was in operation for the majority of international of majority the for operation in was It period. war ’ utl 94 ad h mliaea pyet system, payments multilateral the and 1914, until 0’s vis - à - vis

hi stlie, ai emn ad h Soviet the and Germany Nazi satellites, their 14

small share small emons in emons ating r. It r. s

CEU eTD Collection gen a of lens the through them study to difficult is it differences these of result a As efficiency. economic over considerations system exchange market a of goals the from demand and market and ultimately equilibrium. to supply of forces of detriment the to place in are manipulations price and rates exchange administr practice this to apply standard not that does is omission analysis this for reason One 2005). Veseth, and Balaam or 2003 of textbook any of Obstfeld, part and Krugman (see a economy political international not or economics international is mechanism its studying and 1994) Eatwell, and definition of FinancebilateralPalgrave clearingthe no Milgate in (Newman, Dictionary of is There theory. economic mainstream in topic common a not is trade clearing Bilateral 1.1. regime,to international next. the the from much so not willing on carried the was regime the that hypothesis on the presents It states. small based of cooperation explanation alternative an offers five Part state. hegemonic econom comparative the and totalitarianism of theories by provided explanations available the different under reviews also It four. part and in asked is regimes needs trade similar adopt conditions economic economic different very with powers hegemonic two these why question The similarities. their describes and respectively 1949 and 1933 in

Another reason is the highly political nat political highly the is reason Another DefiningBilateral C c ytm ltrtr bsd n oetc cnmc aaeet f the of management economic domestic on based literature systems ic tv alcto o gos n ast, xot n ipr qoa, artificial quotas, import and export assets, and goods of allocation ative

domestic to the international level as much as from a previous a from as much as level international the to domestic learing

eral theory, applicable to all clearing agreements. clearing all to applicable theory, eral

Central EuropeanUniversity,Budapest -

ure of this regime. Its goals are different different are goals Its regime. this of ure h pie ehns i rpae with replaced is mechanism price the

t roiie scrt ad strategic and security prioritizes it Vera Asenova

CEU eTD Collection Czechoslovakia, Switzerl Sweden, Romania, Chile, Poland, Kingdom, United Norway, Netherlands, the Latvia, Brazil, Italy, Hungary, Greece, Germany, France, Finland, Estonia, Bulgaria, Denmark, Belgium, Austria, Argentina, agreements: 2 bilateral of mechanism The asclearing isdefined follows: 6:10). II.B. 1935, Nations, of (League market” open control instit the by created conditions of out arose agreements clearing Agreements”, Clearing into 1935) Enquiry Nations, of League Nations (Geneva: of League “The in Finance published were and Economic its to delega French the survey by request a following organization, a commissioned Nations of League the 1934 in spread, wide its by Provoked beyond. and Europe in payments international making altogether, regime trade free the and borders national across currency of flow free the restricted severely This flight. capital and devaluation currency against measures temporary as controls exchange Europea many Depression Great the to reaction a As time. longest the for extent greatest the to it used they however analyzesand de the cases historical concrete two approaches but sets, data large to models formal apply not does research this clearing, bilateral of studies other Like institutions. and economy th and agreement clearing a in interests and motivations concrete its state, single a of view of point the from cases contemporary and historical various at looking by inductively them approach we Instead

The League’s report was based on the questionnaire replies of the twenty the of replies questionnaire the on based was report League’s The ete te ai emn nr h Sve Uin netd iaea clearing, bilateral invented Union Soviet the nor Germany Nazi the Neither nta o pyn ter upir drc, ei te au o te motd od in goods imported the of value the remit direct, suppliers their paying of instead –

that is to say state restrictions on the purchase of foreign exchange in the in exchange foreign of purchase the on restrictions state say to is that I n each of the contracting countries im countries contracting the of each n

velopment,causes of bilateraland effects clearingwithinthem.

efcs h prut f hs itrss a o is domestic its on has interests these of pursuit the effects e and, Turkey and Yugoslavia. Yugoslavia. and Turkey and,

cutis et h gl sadr ad adopted and standard gold the left countries n 2 Acrig o h suy []e salsmn of establishment “[t]he study the to According . bilateral clearing a common method of enforcing of method common a clearing bilateral 16

porters of goods from the other country other the from goods of porters

tion. The results of the survey the of results The tion. - five c five ountries using clearing clearing using ountries to o exchange of ution

CEU eTD Collection ecmr o fe tae te ege f ains eot ocue ta these that concludes report Nation’s of League the trade, free of benchmark relayed also Austria and and possible as reads:desirable the questionif response the to Finish The trade. on effects negative purely havingas them saw Chile and Finland evil”; greater still a averting clearing of purpose their achieved bilateral “have defined France clearing any 1935:9). agreem concluded Nations, not of had (League it agreements” that stated government Kingdom “United the and enquiry League’s t the to reply trade not did Turkey and of Germany Brazil, Argentina, manipulation deny to attempt an in Perhaps (Ibid.) effecting for mechanism trade” of direction the influencing a of means a as used been frequently have payments, merely apparently although agreements, “[c]learing accou national aggregated and institutions controlled between trade organizes clearing bilateral countries, different in or country same the in firms and individuals between currency. domestic its in country one within place took bilateral clearing borders, across currencies convertible in credits and debts extension of the clearing system to the sphere of multilateral agreements is seen is agreements multilateral of sphere the to system clearing the of extension Unlike normal banking clearing, which is an automatic and spontaneous offset of offset spontaneous and automatic an is which clearing, banking normal Unlike 65 togethe closely exports and imports s country’ same the not and office clearing the nation the contracting other to the them country. Exporters thereforetheir by paidgoods are for pay to necessary sums the takes office clearing the received, thus amounts the From office… special a to currency national e nprpit t aot nentoa maue… o se to measures… international application. adopt to inappropriate be would It unavoidable. it render circumstances when defended be only Denmark reported that the clearing with Germany had served a good purpose good a served had Germany with clearing the that reported Denmark - ns a te esr f w eis (bd, 9; n acrig o ugra they Bulgaria to according and 69); (Ibid., evils” two of lesser the “as ents 66). …

Clearing agreements should therefore be regarded as an evil, which can which evil, an as regarded be therefore should agreements Clearing

(Leagueof Nations, 1935:79) ht it that

by the foreign customer who bought them...thus linking them...thus bought who customer foreign the by

a pstv eprec wt cern. gis the Against clearing. with experience positive had states 17

hr pyet ae lae truh state through cleared are payments where

Central EuropeanUniversity,Budapest Unl k bre, hc cn e conducted be can which barter, ike l xotr fr od sn by sent goods for exporters al nts. nts. r (League of Nations, 1935: Nations, of (League r h rpr as nts that notes also report The ue hi general their cure e oenet of governments he therefore Vera Asenova -

CEU eTD Collection 1947:133). transactions for and movements capital for methods, clearing bilateralism European Central signed agreements and German the between difference 3 a permitted and liberal more were agreements clearing some operations; clearing inst Different debts. other or commercial of settlement to included they exclusively cases other referred in goods, for agreements payment clearing the cases some In survey. Nation’s a country 1956.before stage early its in especially CMEA, the of system the falls agreements trade simply of example an is Europe Southeastern to drive trade German the measures; emergency of example Anglo the and also and Eastern Europe with Northern Italy and France Switzerland, by concluded agreements period i characterprices.The other and and actively and flows trade financial directing commercial, of payments all covering regime trade and monetary general a as them ap (1) utilizing (2) and outlined: payments effecting for mechanism emergency be an as clearing bilateral can practices distinct Two 1991. until bloc Socialist the dollar US the on based trade multilateral reestablished which 1950, in Union Payments European the of creation the until transactions trade European of majority or clearing bilateral had as generalcompulsoryadopting it a practice however no character. extending against recommendation This 85). 1935, Nations, and trade international of practice agreem clearing bilateral that hope the “expresses normal the from deviation a are agreements

On the postwar bil postwar the On ic ter mrec i 13,bltrl laig gemns ee us were agreements clearing bilateral 1932, in emergence their Since iaea cerns aid o ol ars cutis u as wti te same the within also but countries across only not varied clearings Bilateral

rs taig ates Ter ait i wl dcmne b te ege of League the by documented well is variety Their partners. trading cross

general application. In the same category of trade regime rather than rather regime trade of category same the In application. general

ateral trade arrangements see arrangements trade ateral after the the after

itutions Secon

–

central banks, special offices, monopolies, effected the effected monopolies, offices, special banks, central d World World d - War in Western Europe. The latter provide for «flexible «flexible for provide latter The Europe. Western in War emn laig gemn o 13 wr an were 1934 of agreement clearing German 18

Patterson, and Polak and Patterson,

ents might be abolished” (League of (League abolished” be might ents with third areas» (Patterson and Polak, Polak, and (Patterson areas» third with

in the interwar period and the the and period interwar the in , 1947 , . They demonstrate the the demonstrate They

ed in the in ed 3 nterwar

and in and plying CEU eTD Collection 1941:15) (Ellis, equalvalue.» of import anby 4 theyeconomic matters the werefor used following: servedExchange controls of number purposes.to a respect the international With with below…: specific: Howard ismore Ellis created institution an or bank central a treasury, (a authority public a of hands the in exchange foreign dealin all of centralization “the as Heilperin Michael by defined broadly is control Exchange varied. as just is controls exchange of practice the but clearing bilateral to rates exchange on effects adverse prolonged trade dependence single on a partne and payments delayed from varied also have clearing bilateral of effects The 1935). Nations, of (League country partner the the for formalities bureaucratic signifi varied exporter and importer the adjustment; others to in subject while were period long rates a exchange for rate exchange fixed a used agreements some l often were they option; compensations”. “private of amount limited

A private A         

Exchange control is understood generally to inclu to generally understood is control Exchange of emergence the for reason the as cited universally are controls Exchange

Officiallyconductedbarter Offici Governmentallocation of exchange toimports; Governmentdisposition overproceeds the of exports; Governmentpermissions to export or import;to Multiple Enforcementof overvaluedan an or undervalued rateof exchange; Governmentdisposition overprivate holdings of foreignexchange and assets; Government monopolydealingof in foreign exchange  c

ompensation ompensation allyconductedbilater Tomaintain exchange rate againstdepreciation orappreciation

exchange rates; d hoc ad

deal between two companies is companies two between deal inked to other commercial, financial or military arrangements; military or financial commercial, other to inked (elri, 9928 n eosy n Dmtoa 2007). Dimitrova, and Nenovsky in 1939:238 (Heilprein, )

alclearing; (Ellis,1947:877). cantly, depending on the type of goods traded and traded goods of type the on depending cantly, .

4 Central EuropeanUniversity,Budapest

tes ee titr n ecue this excluded and stricter were Others

r (Ibid.). r (Ibid.).

«an immediate offset of each parcel of export export of parcel each of offset immediate «an

de any or all of the instruments dealt instruments the of all or any de

Vera Asenova

gs in gs

CEU eTD Collection nonand residents between payments free; were The countries. fr was pound British Scandinavian the which within the time the at and union clearing multilateral Brazil biggest the was Argentina, Area Sterling include Those 1931. September after pound countries sovereign 5 However 1935:172). (Clayton, transactions clearing the facilitated spent” or held only be “could which sterling, blocked of accounts” “[S]pecial countries. circulating freely was pound the where Area Sterling whole only goods on payments and for werestrictly used they not bilateral; 5 September on introduced as follows: hoc ad somewhat appear may they and use their for reasons and duration the on contingent are control exchange of Definitions strict. very to mild from varied controls exchange

eely circul eely The Sterling Area comprises the British Empire dominions, colonies and mandates plus a number of of number a plus mandates and colonies dominions, Empire British the comprises Area Sterling The these resources according to its own list of priorities, instead of leaving the the leaving of instead in priorities,bidding competitive by of determined be to list satisfied be to own needs the of its selection to according resources an these payments allocates authority making central the for result a availableAs limited. are means abroad purchases the therefore of scarcity a is wartime of There principle rationing. the of extension an as considered be can control Exchange served, they purposes the and instruments of number the on Depending respect With to domestic economic matters: This view originates from the British experience where exchange control It was It control exchange where experience British the from originates view This the mark on a case a on            ating and served as its as served and ating

Towage economicwarfare (Ellis,1947:878). Tocontrol or forcecapital movements. Tosecure more favorable “termsof trade”. To“permit Toattain equilibriumin thebalance ofpayments o iciiae aoal o ufvrby ih epc t cran esn or persons certain to respect with unfavorably classeswithin domestic the econom or favorably discriminate To Toprovide revenue for thestate. Toprepare foror wage war. To fosterindustrialization etc.i.e. «protection». T Tocontrol inflation or deflation. oincrease domestic employment. et.

(Clayton,1953:161) ,

- which followed Britain off the gold stand gold the off Britain followed which by

- case basis. In the case of British clearing Clayton, 1935 defines it defines 1935 Clayton, clearing British of case the In basis. case trade to on” withoutgo available exchange foreign

1939 , reserve currency; «payments between residents of the sterling area area sterling the of residents between «payments currency; reserve

AJB, 1944) (A.J.B.,

r esidents were controlled.» (Clayton, 1935: (Clayton, were controlled.» esidents

y.(Ibid.)

Biih laig gemns were agreements clearing British . ard and fixed their exchange rates to the the to rates exchange their fixed and ard

n non and

were between the were between tee were there , - trig area Sterling 164) d

CEU eTD Collection Finland of 6 the Committee Financial Nations of League the of position the with disagrees Enzig Nations,1935:25).(League of exports German of proportion the to limited were Germany to exports British but controlled or limited not were UK the to imports German which under agreement payment of example an is 1934, 1st by Germany with and practiced was Europe Northern and Eastern control with agreements their in Italy exchange and France Switzerland, under payments commercial effecting for post the in Union the Soviet with trade clearing Finland's and Germany with agreement clearing British the countries, European Southeastern with agreements clearing Poland's are examples Such rules. preferred its under country control exchange an with trading in interested th if agreements clearing bilateral of part be also can countries exchange Free intergovernmental and policy countries. trading both for condition necessary a not is government control Exchange negotiations. on depends but automatic purely not to lead bilateralism.full necessarily not does control exchange that is Britain of case the on based conclusion non with ste account clearing group a used countries American Central the also allowed; were accounts clearing private some and centralized always not was cases. Control some in allowed were payments multilateral and bilateralism to exceptions

See Laurila, Juhani, Juhani, Laurila, See ln cutis wih loe mliaea pyet bten hm Clayton’s them. between payments multilateral allowed which countries, rling hs en ta te eainhp ewe ecag cnrl n bil and control exchange between relationship the that means This hr ae lo oiie vlain o te xhne oto mcaim Paul mechanism. control exchange the of evaluations positive also are There , 1995. ,

“Finis itself. The Anglo The itself.

- - Soviet Clearing Trade and Pay and Trade Clearing Soviet war period. war

to the UK in order to maintain a stable balance of trade. of balance stable a maintain to order in UK the to - German clearing agreement concluded November concluded agreement clearing German 6

Bilateral clearing as an emergency mechanism mechanism emergency an as clearing Bilateral 21

Central EuropeanUniversity,Budapest ment Syste ment m

History and Lessons” Bank Bank Lessons” and History Vera Asenova trls is ateralism ey are are ey -

CEU eTD Collection mea the dominates function value of store (the currency reserve a on based be value system financial of international the store that proposed White (the whereas reduced), currency is function reserve a not but exchange international of means primary of a with role unit monetary international the an proposed of Keynes money. conceptions different two on rested plans two The 2009:1). Amato, multilateral mean “pure providing proposed Keynes Fund”, Stabilization international “producing proposed which White, Dexter Harry of plan alternative the to Compared o elimination the was it for argument main His 1941). (Keynes, liabilities” and assets debts, and credits between equality necessary the is system This system... anyclosed in exhibited is it as banking, of principle essential the Union Clearing International of idea the on system financial general practice a wouldbe wouldrequire and cooperation. international internatio their of part greater the for 1947 Ellis, by defined policy trade and monetary of instruments the systematically adopt to exchange the to parties both requires it that in operation clearing bilateral simply bila A rule. a as but exception an as not practiced cited in(Einzig,as 1935 Cahan, 1937:138). the “eliminate exposed, unnecess is trade international which to risks reduce greatly would establishment universal their that argues He disorder. financial international of time exchange It is important to note that John Maynard Keynes based his plan for the post the for plan his based Keynes Maynard John that note to important is It are they when agreements clearing bilateral of case different qualitatively a is It ary gold movements, bring to an end the immoral activities of speculators…” of activities immoral the end an to bring movements, gold ary

controls are in principle a deviation, and finds them a useful instrument in instrument useful a them finds and deviation, a principle in are controls clearing clearing liquidity of current accounts in the form of a currency unit” (Fantacci, (Fantacci, unit” currency a of form the in accounts current of n h bss f eev crec, akd y n International an by backed currency, reserve of basis the on 22 nal trade sector. A regime in other words other in regime A sector. trade nal

teral clearing regime is distinct from from distinct is regime clearing teral f accumulated trade imbalances. trade accumulated f , which would “generalize would which , ad esr fr the for measure and s

function as a as function ns of ns - war CEU eTD Collection different that said be can It frameworks. ideological dominant and states partner puzzling objectives political is structures, economic systems different of Soviet background the and against Nazi the by used regimes trade of similarity The 1.2. and1956. 1933 period the in Germany for sections future in comparatively examined be will regimes trade these of similarities The 1949. est the with countries socialist among cooperation economic of method official the as adopted was regime clearing bilateral The regime. clearing bilateral same the under other each t of a was aIt part also of policybroader countries.foreign towardspartner clearin bilateral a than temporary thedominantrather regime monetary trade measure. constituted and cases both trade In Union countries. Soviet socialist the the of with case relations the in and 1939 and 1933 between Turkey and Greece Yugoslavia, Romania, Hungary, Bulgaria, with relations economic Germany’s monetary and was general clearingthe Bilateral 1936:465). (Ritter, country» other any than them with experience more had unfortunately, has, this Making 1941:6). (Keynes, distinction agreement” payments a “taking as of proposal advantage his in improper it to referred he and experience, clearing German the of aware course of was Keynes draft the of time the At money). of function exchange he German economic sphere, continued to trade with the new hegemon and with and hegemon new the with trade to continued sphere, economic German he

After the end of WWII the countries of Eastern Europe, which were formerly part part formerly were which Europe, Eastern of countries the WWII of end the After and agreements clearing more concluded has «Germany writes Ritter Karl As DifferentPolitical Ends ablishment of of ablishment

between the two was regimes important. the Council for Mutual Economic Assistance (CMEA) in early early in (CMEA) Assistance Economic Mutual for Council

23 - 1939 and for the Soviet Union between 1945 between Union Soviet the for and 1939

Central EuropeanUniversity,Budapest

trade regime in the case case of the in regime trade

agreements g Vera Asenova vis - à - vis

CEU eTD Collection atr Erp. ata mdriain n h arra sco wa sector agrarian the in modernization Partial Europe. Eastern comparative industriesofdeveloped “dubious countries advantage” 1974). (Holzman, effec mixed had policy this countries European Central post the of beginning the at Union Soviet the Because market. socialist the on sales and materials raw of supply Soviet economic socialist intensi for meant modernization plan Stalin Stalin’s For development. following countries all in discouraged was it in investment and upon down looked was hand other the on Agriculture influence. economic achieve to way a as industrialization under itself Union, Soviet The terms. economic and political in differently conceived were empires these empires, their of Unio Soviet the and Germany Nazi both While International division1.2.1. oflabor 2000:234). (Janos, Moscow to loyal cadres country each in positions key at appointing leaders, client trade offering and agreements trade bilateral through relations, economic of means by ruled empire ce the from control of mechanisms The ideology. and institutions relations, security and economic the understandingsof different reflecting organizedwere hierarchies political ba were which projects, imperial different to refer here ends political Different regime. means economic similar through pursued were ends political trt teprpey f hs ipra ytm as ifrd n ere h Nazi The degree. in differed also systems imperial these of periphery the to nter e o dfeet da o wa te n gas f hs poet wr. Different were. projects these of goals end the what of ideas different on sed

ilr o te otay dd o am o oenz o idsraie h rgo of region the industrialize or modernize to aim not did contrary, the on Hitler, state. The Soviet empire ruled by means of direct control over the political political the over control direct of means by ruled empire Soviet The state.

- fs ewe eooi gis n lsee pltcl uhrt o the of authority political lessened and gains economic between offs - war period was less industrialized than some of the of some than industrialized less was period war -

industrialized in relation to Central Europe, saw Europe, Central to relation in industrialized 24

n saw Eastern Europe as an extension an as Europe Eastern saw n development and legitimize its political political its legitimize and development ts. Thus many East European East many Thus ts. e nutilzto bsd on based industrialization ve –

h bltrl clearing bilateral the ahee under achieved s

CEU eTD Collection materials. Germany Yugoslavia. from ores and Romania mach exported from oil timber, as such materials raw and vegetables 7 2002). Heim, include not did st a Europe assigned but Eastern industrialization for plans economic common postwar the and Even complementarities interests. advantage, comparative on based relationship co that Reichs Affairs Foreign in publication 1937 a In Europe. Eastern of partner trade “natural” the as position its in confident was Germany aspirations. developmental their to counter smal the For post the for Plan New the to according and War World Second the before periphery the they that interest German be at should purchasesthe mercy of their of raw (Einzig, materials” 1941:14). Germany’s was it because simply industries meat and canning industrie developing of possibility fruit developing from prevented were Romania the and “Hungary Einzig Paul to According without foodstuffs export would which South peripheryin the agricultural and Reich theThird core, industrial (E industries processing food German 1941:13). with competition into come not did it where only and sector agricultural the to limited was industrialization this But 2007). (Wien, Bulgaria of economy underdeveloped very the in dominance trade German

The exports from the region to Germany were predominantly foodstuffs, grain, tobacco, fruit and and fruit tobacco, grain, foodstuffs, predominantly were Germany to region the from exports The - war period was based on a pre a on based was period war In t In As the dominant industrialized economy in the region, Germany was the only one only the Germany was region, the industrializedin economy dominant the As marketis a matterof life and death. (Schacht,1937:223) East bank governor Hjalmar Schachtbank governor Hjalmar states: l rsod o h nes f h udreeoe arra cutis a countries, agrarian underdeveloped the of needs the to respond uld

he German economic sphere the bilateral clearing trade between the core and core the bilateral the between German sphere clearing economic trade he 7

- h itrainl iiin f ao ws n ie ih emn interests German with line in was labor of division international The uoen onre ae rdmnnl arra. o te te German the them For agrarian. predominantly are countries European l countries, however, continuing the agrarian profile their profile ran agrarian of economies however, the l countries, continuing ines, including military equipment, chemicals, transportation vehicles and industrial raw raw industrial and vehicles transportation chemicals, equipment, military including ines,

ity gain pcaiain f h rgo (l and (Aly region the of specialization agrarian rictly - existing pattern of international division of labor. of division international of pattern existing 25

Central EuropeanUniversity,Budapest

- Eastern Europe, Eastern Vera Asenova inzig, s. –

CEU eTD Collection agr in (Janos, force 1960 in percent 56 to 1930 in force labor total labor the of percent 79 from declined The implemented. were advantage, comparative their Large bloc. political a within states autarkic among cooperation on sphere economic its based western the powers” 2001:326). (Ritschl, with relations financial from retreat selective a largely was 1930s the in policy autarky cont the In autarkic. whole a as was center the in Germany with bloc clearing through The trade. clearing sphere bilateral economic its into partner trading each integrated Germany where four The regime. clearing bilateral the through assumed was system monetary the over control South of region the to applied successfully was logic their but were declared: openly of Euro question the to related directly is materials raw to access and colonies German of question a the how in explaining made and audience was American above the addressing cited publication statement Schacht’s colonies. of it deprived Versail which the protest to continued Reich the and industry German the for materials raw sufficient supply not could alone Europe Eastern of region the However Raw materials1.2.2. autarky and en ec. h to odtos o slig hs usin n scrn peace securing and question this solving for conditions two The peace. pean These German demands were never honored in relation to its former colonies, former its to relation in honored never were demands the German These that so territories, colonial the in prevail requiredinvestment maybe made with Germancredits. (Schacht, 1937:233 must system currency German Colo management.Second this colonial territory partmustof her form monetary system. h post The - ye nial raw materials cannot be developed without considerableinvestments.[…]developed without be cannotmaterials raw nial is Gray ut rdc is a mtras n ertr udr t own its under territory on materials raw its produce must Germany First - ar plan of rearmament announced by Hitler in 1936 envisioned a system a envisioned 1936 in Hitler by announced rearmament of plan ar scale programs of industrialization in the agrarian countries, regardless of regardless countries, agrarian the in industrialization of programs scale - a Sve Uin n otat a n sotg o ra of shortage no had contrast in Union Soviet war ext of the severe insolvency during the Great Depression “German Depression Great the duringinsolvency severe the of ext

- Eastern Europe where Europe Eastern mtras and materials w - 234). e Treaty, les iculture

CEU eTD Collection Ideology 1.2.3. i and that sovereigntymean national was prese fully nation This Europe. Eastern in influence multilateral for Soviet limit to aim which Europe, of economies own the of control for institution centralized their of de This institution relations. trade an of management form countries European the that rather but advantage one ofeconomic autonomy. argues1994 Roberts, that: theirit threatened autonomy. the joining that was join to not countries European East against to “advise” the behind and Plan Marshall argument main The countries. socialist among specialization led This 1972). (Ausch, war” world new imminent an of “expectation the with justified was autarky socialism of years early the In them. between agreements bilateral and countries, individual the in industrialization system “The production. industrial of sel of combination a was Stalin majority by envisioned the bought turn in which Union, prod 1980:75). Bank, World industrial the of and percent 50 than more up made 1974:306 chemicals and metallurgy Machinery, Ranki, and Berend on based 2000:344, uction these (Janos,of countries 2000:345). proposed central direction of European economic European of direction central proposed projec Soviet The Soviet bywere the bloc secured socialist industrialization the in for Raw materials h Aeia cniin o gatn fnnil i udr h Mrhl Pa was Plan Marshall the under aid financial granting for condition American The national essentially the organization ended in failure (Roberts,1994: 1383). amend to were period postwar grounds the in these on objections efforts Soviet alland purpose and characterComecon’s subsequently in embodied Moscow’s sovereignty. economic national it things, other among because, Plan Marshall the rejected formally Moscow nstitutions ws o oe f cnmc nerto bsd n comparative on based integration economic of one not was t

- in a se b te oit no a a as Union Soviet the by seen was sign ae caatr f h eooy os not does economy the of character based o vr lw ee o pout n sector and product of level low very a to

Central EuropeanUniversity,Budapest rved. f - sufficiency, which was the end goal of goal end the was which sufficiency,

development and limitations on on limitations and development

- ae character based Vera Asenova

f the of

CEU eTD Collection France. with reconciliation for in 1926 Price 9 1932. and 8 GustavwithStresemann’s line in waswhich borders, national by unhampered markets big needs industry big that view the on rested They Europe. Eastern of region the toward responsibility even and leadership of position historical Grossraumwirtschaft the keeping for justification economic no strict:exchange controlso was there 1933 after that concludes exchang German the of analysis his In partners. trade with relationship exploitative an in resources economic securing and trade manipulating for used was system this power to ascent Nazi the After purpose. defensive purely the 1933 Until 1991:581). (Temin, subsequentthe convertibilitycurrency of and limitation same” the roughly were control of forms the but Bruening of those from differed mark the of value high the maintaining for motives Bruening Heinrich of government the by 1931 August in socialist introduced were They 1940:1). national Ellis, in cited a 1939 (Muller, innovation not were controls exchange money”, “modern as economists Al predecessors. political its of legal framework the with accordance in closely remained practices Nazi significantly. differed also justified were cooperation economic of policies Soviet and Nazi which in way The

Heinrich Bruening was Bruening Heinrich Foreign minister between 1923 and 1929 in the Weimar Weimar the in 1929 and 1923 between minister Foreign Most arguments in favor of the German expansion to the east and the building of building the and east the to expansion German the of favor in arguments Most overvested economic interests within country” the (Ellis, 1940:132). politicalpower

Te nttto pritd eas i ws n instrument an was it because persisted institution “The –

a Social Democrat chancellor Democrat Social a political powerpoliticalonlyfore not over ee ae o eooi mtvs n suh justi sought and motives economic on based were

28 as a measure a as

huh eertd y ainl socialist national by celebrated though of an emergency cabinet between 1930 between cabinet an emergency of Republic and a co a and Republic ign states but statesign equally significantly increase of clearing trade had a clearingtrade increase of

against capital flight. Hitler’s flight. capital against 9

vision that vision cnrl oad Ellis Howard control e a excellence par - laureate of Nobel Peace Peace Nobel of laureate

only a strong a only iain n a in fication

of CEU eTD Collection gr 7.74 10 chervonets 1922 gold the currency, new the and institutions market of reintroduction partial the to led and temporarily course the reversed eventually They uprisings. and famine crisis, economic and monetary caus but socialism building towards step essential an as conceived was This Gosbank. the by issuing money massive through practice to of brought was money annihilation of idea the Communism War of period the During transformations. underw sharp economy Soviet its the regime After tsarist the 2006). from departure (Nenovsky, 1914 in already Standard Gold the left Russia ideology. Communist by framed managers enterprise and personnel administrative the werecontrols temporary. that assuring while the all economies managed administratively into countries partner of bureaucracies the Depression. and itself transformed gradually bureaucracy German the Great the of circumstances under course inevitable the policy theiras step of each Announcing the by imposed measure temporary pre the their the“normal” werewith current policies line that in international its regain and Power (Wright,reputation 2002). Great a to Germany restore could economy

The Chervonets was 25% backed by gold and 75% and gold by backed 25% was Chervonets The - Soviets, on the other hand, had an openly re openly an had hand, other the on Soviets, maintained government socialist national the policy foreign of question the On 94 Te E ws olwd y h frt five first the by followed was NEP The 1924. .

of pure gold pure of - existing trade patterns. The clearing system was presented as an emergency an as presented was system clearing The patterns. trade existing ceased ,

which was equal to 10 pre to equal was which

exists. to - backed chervonets backed

A new A ruble ruble - revolutionary gol revolutionary 29 was introduced with introduced was

10 Central EuropeanUniversity,Budapest , under the New Economic Policy (NEP Policy Economic New the under ,

backed by short by backed volutionary approach to institutions, to approach volutionary den coins coins den

- course of events and continuing events course of er ln n 1928 in plan year - term bills. It bills. term (Nenovsky the monetary reform of reform monetary the n a eis f radical of series a ent the circumstances,the

had a gold parity of of parity gold a had , 2006:9 Vera Asenova .

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CEU eTD Collection 12 and the class socialism read careful 11 theoretically not was economy managed concrete the to of development theory The policies. or economic ideology from direction the in not least at one, causal a not of monopoly political the of establishment “the party(Janos,2000:communist systems” 231). through but did Reich the like policy economic through not was Europe Eastern over control effective exerted Union internati and domestic to respect with its despite one anti capitalist an was ideology Soviet propaganda, socialist national a remained which ideology, Nazi the Unlike exchange. effo revolutionary a in elites communist local and Union Soviet the by imposed were complexes industrial owned agriculture transferr were institutions and policies Soviet and USSR the as development economic of path same the on as seen were satellites European East CMEA the within planning economic postwar the a production mass (Alexandrov, rubles 000 1949). 10 above deposits for advantageous least and deposits var for deposits rate conversion the with mind in war class the with undertaken was reform this Even ruble. new 1 to old 10 of ratio official an at depreciated ruble the and abolished 1947.

With the exception of Poland of the exception With Stalin did not openly oppose the NEP and avoided any conflict with Lenin on this issue but a more more a but issue this on Lenin with conflict any avoided and NEP the oppose openly not did Stalin By the year 1947 the internal Soviet economic model based on collectivization, on based model economic Soviet internal the 1947 year the By The The 11

ih hs eod oeay eom n h Sve Uin h cevnt was chervonets the Union Soviet the in reform monetary second this With relationship between ideology and economic organization in both cases was cases both in organization economic and ideology between relationship i 12 g f i saeet rvas ht e on te E cmrmsn te n gas of goals end the compromising NEP the found he that reveals statements his of ng , nationalization of the financial and banking sector, building of large state large of building sector, banking and financial the of nationalization , ied according to the size of deposits. It was most advantageous for small for advantageous most was It deposits. of size the to according ied d diitaie loain f eore ws ul etbihd In established. fully was resources of allocation administrative nd

war

against the capitalists the against .

d no hi eooi srcue. olciiain of Collectivization structures. economic their onto ed t o lmnt cptls mds f rdcin and production of modes capitalist eliminate to rt nl cnmc eain. h wy h Soviet the way The relations. economic onal

(Himmer, 1994) (Himmer, 30

- capitalist, a communist one communist a capitalist, - CEU eTD Collection the economy. of control administrative to step» by «accidentally...step 13 and Nazi of ideologies The 1966:77). Bornstein, in cited 1962, (Comey, or doctrines” realities” current from attention deflect “authentic to made are statements ideological – nati a on such on advice coordination their and units production of no organization internal the as issues important offer Engels and Marx “[s]pecifically because administrators in need to according socialism, in contribution to according distribution (6) and labor, to all of liability (5) money, of abolition (4) content, labor their to according goods of valuation e and production post the of “elements following the prescribes ideology Marxian 74). 1966: (Bornstein, action” and ideology mo much “post a served ideology But resources. of ownership “collective” for prescription concrete a with be should organization economic of form approach was pragmaticThe ratherthan a ideological one. economy. the of spheres more and more to spread control the as spontaneously economic The nece 1940:261). not (Balogh, were arose” institutions they as problems “solved but base theoretical a from operate not did Schacht Dr. and Nazis “the war, the during policy en nor prescribed,

Eucken attributes an important role to the full employment policy in Germany which in his view lead view his in which Germany in policy employment full the to role important an attributes Eucken guiding concrete policies, much less than it served a “masking” function function “masking” a served it than less much policies, concrete guiding o te oit no tee ee etil gnrl udlns o wa te end the what for guidelines general certainly were there Union Soviet the For

communism” (Bornstein, 1966:74). But these could provide little direction for for direction little provide could these But 1966:74). (Bornstein, communism” onal (an international) scale” (ibid., 75). Ideology served a “directive” function function “directive” a served Ideology 75). (ibid., scale” international) (an onal re than the ‘ideological determinism’ explanation of the connection between connection the of explanation determinism’ ‘ideological the than re ating’ – cag, 2 pann i pae f h ‘nrh’ f h mre, (3) market, the of ‘anarchy’ the of place in planning (2) xchange,

tirely planned. As Balogh points out in a critique of British monetary British of critique a in out points Balogh As planned. tirely hn oiis r esrs r jsiid y iig ideological citing by justified are measures or policies when

- aiait cnm: 1 ntoaiain f h mas of means the of nationalization (1) economy: capitalist

srl prud osiul bt hy ee rie at arrived were they but consciously pursued ssarily 31

Central EuropeanUniversity,Budapest - hoc rationalization’ explanation explanation rationalization’ hoc

Vera Asenova –

“when 13

CEU eTD Collection development their from within(Khodarkovsky, 2002). promoting and core its into territories absorbing of tradition Russian the with line in pe a and core industrialized an on based empires European century nineteenth of type the of essentially not was empire This 2000:235). (Janos, empire functional fully a it making thus bloc socialist the in 19 in Pact Warsaw the of signing The satellites. its of alliances security and economic external the over control empire full an having created contrast in Union Soviet The 2009). (Lake, influence of sphere relati securityindependent conducted still trade, bilateral German on dependent heavily though even Germany, of countries empire an and influence of sphere a between differed. also countries partner theirto granted states core two the autonomy of level view the of securitypoint a From Security 1.2.4. Mutual Assistance.Economic of Council the of framework the in imports and exports for plans annual on exch international of organization the for structure formal a adopted Union Soviet the contrast In changes. regulatory incremental of basis the on advanced but directly prescr not did they second, and different all of first were Europe Eastern to expansion Soviet institutionalized formally never was case Nazi the in regime clearing bilateral The ibe action. action. ibe

t s rcsl ti dfeec ta das h line the draws that difference this precisely is It riphery, supplying agricultural and raw materials, but materials, raw and agricultural supplying riphery, ons with third parties third withons 55 formalized the coordination of military affairs military of coordination the formalized 55 32

according to Lake, 2009 Lake, to according

an arrangement seen as aarrangement seen as an .

ange based ange The partner The CEU eTD Collection panic spread Anstalt Credit theAustrian of collapse the MayIn 1931 severely reduced. foreig of moratoria of announcement Followingthe reichsmark. the of value the on pressure downward put Treaty Versailles the following burden reparation its addition In reserves. foreign declining and flight global and market the subsequently trade around formed blocs core countries. replaced blocs exchange and monetary different three Depression Great the of result beca preferred not was currency foreign of terms in level lower a at currency national the Fixing (Germany). hyperinflation with experience recent their of because option risky highly a considered ( others and Austria controls exchange imposed strict but goldparity the preserved group growth longer standard Gold standard gold the left and earlier currencies their devalued Some countries. different in responses differed conditions economic Global 1949. in Union considerably two the in cases. Soviet the for case the not was This exhausted. already were alternatives all when frame time short very a in was regime trade same The Different1.3. Global Conditions h Grea The The Great Depression quickly re quickly Depression Great The –

France, Belgium, the Netherlands and others forming the gold bloc; a third a bloc; gold the forming others and Netherlands the Belgium, France, - Dpeso, hc satd n h UA n 99 tigrd different triggered 1929, in USA the in started which Depression, t

ra Bian n 91 n te S i 94 ohr eand n the on remained others 1934; in USA the and 1931 in Britain Great eosy n Dmtoa 20:1. o te dvlain was devaluation them For 2007:11). Dimitrova, and Nenovsky

but conducted deflationary policy and limited prices, wages and wages prices, limited and policy deflationary conducted but use it could have induced a new inflationary spiral. Thus as a as Thus spiral. inflationary new a induced have could it use

adopted by Germany in 1931 out of economic necessity, economic of out 1931 in Germany by adopted

n debt in Latin America international lending was lending international America Latin in debt n ached Germany in the form of short of form the in Germany ached

Central EuropeanUniversity,Budapest –

Germany, Italy, Germany, Vera Asenova - term capital term

CEU eTD Collection 1940:9) (Ellis, countries. foreign cash» The confidence. restore will this that expecting payments continued 14 th opened turn in which 1991:580), (Temin, control” exchange required mark the of rate exchange “overvalued the time same the At suit. followed it when 1939 in problems liquidity similar faced reas primary the were were controls in August1 introduced Germany on Exchange capital. of outflow the stop to order in controls exchange option one with left was Germany situation this In 1940:9). (Ellis, catastrophe greater coming oppositethe of sign a was this street” the on “man the For effect. fact in had it But depression. the slow to and panic the curtail to was Moratorium Hoover the of intention The 1973). (Kindleberger, Germany to loan a extend not did therefore and yet Europe in interest political articulated an have not did creditor, able was relativ other reparations, the USA, The Germany. financing German of idea the to of opposed categorically majority the of recipient the also was and Europe in reserves gold highest the had which France, consequences. political potential its and the of magnitude the 1973 realized it although Germany to Kindleberger, lend to unable was Britain to According 9). (ibid., notes” its against requirement reserve percent 40 the of limit the approaching was and reserves in reichsmarks billion a lost reichsba “the month a Within secure. not could it which credit, foreign of need urgent in itself found and deficit budget growing a and unemployment rising already fighting was government the bills time that government By 1940:8). discounted (Ellis, Germany of in insolvencies rise runs, bank world, the across

Ellis, 1940, traces the logic of the reichsbank to the old banker's rule to fight a bank run with with run bank a fight to rule banker's old the to reichsbank the of logic the traces 1940, Ellis, Decreased liquidity in foreign exchange as a result of capital flight and insolvency and capital flight ofresult a as exchange foreign liquidityin Decreased in the circumstances of 1931 Germany1931 of circumstances thein -

allowing Germany to postpone payment on its reparations with a yea a with reparations its on payment postpone to Germany allowing

n fr t itouto. ne dfeet icmtne Britain circumstances different Under introduction. its for ons wy o iaea cern. te cutis n uoe also Europe in countries Other clearing. bilateral to way e .

1931 1955). (Child, meant that meant 34

an equal quantity of foreign currecy was lost to lost was currecy foreign of quantity equal an

«willingness to convert credit into into credit convert to «willingness –

the urgent intro urgent the 14

n major and duction of duction nk had nk

crisis ely ely r, CEU eTD Collection ntttos f hs sitne ee o e eoitd y h Erpa countries European the by negotiated be to were assistance this of institutions Europe of reconstruction Se US 5, by 1947 June on Announced weeks. few a of course a over rejection to interest positive the under from evolving gradually, formed plan this assistance on position Union Soviet The Plan. Marshall financial American accepting and democracies European theand UnitedStates. West democratic the of leaders the with held were negotiations various which during h the Soviets. In addition,side USSR. They of and alternativestime the both were on The 1931. in present in not were Germany in control exchange adopting Germany for reasons and conditions to comparable crisis financial no suffered it II, War World i bore Union Soviet the that losses human and material huge the withstanding Not 1947. of reform monetary the The of means by reparations. stopped was war, of the by created way inflation, a as Europe Central and Eastern in claims financial and Paris Ge all the acquired WWII of victor a as Union Soviet to the 1947 of treaty peace According labor. and land resources, natural with endowed well was was regime this power to ascend currencytransformed a toolof to a econfrom mechanism defense Nazi 1933 the After payments. frozen these enforce to Germany for way a were agreements The 1936:468) (Ritter, reichsmarks.» in increased claims commercial German similar for «frozen» Germany«The illiquid. them to as exports German on payments rendered time This reasons. same the around at controls exchange introduced ad two years between concluding the peace and shaping the new economic regime economic new the shaping and peace the concluding between years two ad In 1949 the Soviet Union had no shortage of foreign currency or gold reserves. It reserves. gold or currency foreign of shortage no had Union Soviet the 1949 In h atraie cnmc ragmn ws oprto wt te western the with cooperation was arrangement economic alternative The cretary of State George C. Marshall, this plan aimed at the economic the at aimed plan this Marshall, C. George State of cretary

–

at n ws, emn icue. h frs and forms The included. Germany west, and east 35

Central EuropeanUniversity,Budapest fw ots o ery n billion one nearly to months few a omic manipulation. Vera Asenova rman assets rman n

CEU eTD Collection 1.4. conflict”2000:230). (Janos, managed war the with cooperation of course policy a from shift a of signal first the was and calculation economic than rather considerations policy foreign by motivated was Plan Marshall followin withdrew but July, 9 by invitation the accepted had that one only the was Czechoslovakia same. the do to countries European East the to communicated Moscow project, Plan Marshall the d however Molotov (Ibid.). 12 July on discussions of round second the to invitation” the declining in USSR the emulate to “not advised and Plan Marshall the and Stalin between disagreement” Sovietsthe the left meeting” (Dimitrov,2011:171). pan a in participating and circumstances economic its disclosing country each on conditional were credits American that aware become they “Once Plan Marshall was forthcoming Soviets in participation the own of response positive their ensure “to advised were they and countries European East the to The communicated 1994:1375). (Roberts, talks” the advisers 100 “nearly of delegation a with meeting the attended Molotov proposal, the in interested Initially Paris. in them with meet to invited was Molotov minister foreign Soviet the proposal min foreign the After themselves.

Initial Similar Economic Means - ie lis o cou a to allies time y te at uoen onre wr ifre aot h “ra of “areas the about informed were countries European East the ly, id not attend the second meeting and soon after withdrawing from from withdrawing after soon and meeting second the attend not id –

a definit a g a meeting in Moscow the next day. The rejection of the of rejection The day. next the Moscow in meeting a g s o ioain “otimn ad ltr o carefully of later, and, “containment isolation, of rse ive sign of the seriousness of Moscow’s approach to approach Moscow’s of seriousness the of sign ive ses f rne n Bian eie t acp the accept to decided Britain and France of isters

icsin (oet, 1994:1373). (Roberts, discussions - European program, European CEU eTD Collection below sold be would they exported, and domestically bought if therefore subsidized, heavily were but value nominal low had re market domestic the not on Prices did production. prices domestic the because and quantities planned – such expaavoided Yugoslaviaand Romania exporting government. the by be financed to had these when even Germany to exports increase to incentive an providing Hungary and Bulgaria blocked accumulated The lifted. rei be would reichsmarks controls blocked exchange in the that balances expecting positive accumulate to willing were countries European East Some incon measures. temporary completely as proclaimed as were controls exchange reichsmark the see not did however partners trading Germany’sgoods. German on spending allowtoits Reichsbank the to up was it reichsmarks blocked of balance positive a had country foreign a if even and thefreely market sell inthelocal at buy local or or currency. cannot foreigners that means inconvertibility Commodity blocs. trade Soviet and Nazi inconvertibility, commodity to leads also but transactions international in exchange of medium a as no used longer is money that only not mean controls exchange with introduced inconvertibility of its function to reduced is money of role the regime trade clearing bilateral a in price mechanism, a follows exchange and allocation resource where and account of unit value of store exchange, of means a as used is money where regime trade free a Unlike

oeges ol nt hp o lcl od bcue hs ol itree ih the with interfere would this because goods local for shop not could foreigners chsmarks, called “sperrmarks”, were treated as a kind of reserve currency by by currency reserve of kind a as treated were “sperrmarks”, called chsmarks, emn xot i te 90s ee controlle were 1930’s the in exports German In the Soviet Union “commodity inconvertibility” was imposed by the national plan national the by imposed was inconvertibility”“commodity Union Soviet the In

ui o acut n a ey uiu soe f au. Currency value. of store dubious very a and account of unit a nsionary policy 1979). (Neal,

government controlled prices and strict bilateralism in both in bilateralism strict and prices controlled government 3 7

Central EuropeanUniversity,Budapest

b government by d

etbe eas the because vertible lc te ot of cost the flect - sud licenses issued Vera Asenova

CEU eTD Collection 28 did which feature, institutional fundamental a was ruble the of inconvertibility The account. of unit arbitrary an but value of measure parametric a not was it Nevertheless 188). 1966: (Wyaczalkowski, IBE and gold pure of grams 0.987412 of content gold a had ruble transferable The it. for market of lack the and inconvertibility its to due partly was This partners. trade USSR’s the by currency in reichsmark the Unlike currency. other any in nor gold in neither CMEA, the outside convertible not was ruble transferable The 1964. in (IBEC) Cooperation Economic for Bank International the rubles. in balances wer positive export to Incentives accumulate to incentive less had countries 4:1) of dollar socialist the to ratio a (at account of unit bloc the as dollar the replaced ruble Europe East among in yearthe socialist and a bloc for period of years.five a to up for Germany Nazi of case the in fixed were goods tradable of Prices clause. a maintaining while ruble, transferable the to later and reichsmark the to first fixed were currencies European East of rates exchange The principle. of matter a as fixed also were rates Exchange parametric not arbitrary, is which framework a within operates … Union Soviet the in producer “the that maintaining “arbitrary”, term the prefers Kaser while “irrational” as economy the in prices domestic see others and Holzman cost. production real their

y aaee h mas n xhne ai, a uniy hc i cntn, s itnt rm the from distinct as constant, is which quantity «a ratio, exchange an means he parameter By variables, in a particular case considered, but which varies in different in varies which but considered, case particular a in variables, For the period 1944 to 1952 the US dollar was used as a unit of account in trade in account of unit a as used was dollar US the 1952 to 1944 period the For 15

bt … rirrns i n wy ugss rainlt” (Kaser irrationality” suggests way no in arbitrariness … [but]

n oils cutis n te oit no. hn n 92 the 1952 in When Union. Soviet the and countries socialist an e low even after the introduction of the transferable ruble and ruble transferable the of introduction the after even low e

’ cptl mutd o 0 mlin rnfrbe rubles transferable million 300 to amounted capital C’s the 1930’s, the transferable ruble was not used as a reserve a as used not was ruble transferable the 1930’s, the

e jure de

o dpn o te viaiiy f od u o the on but gold of availability the on depend not

fiilgl prt truhu without throughout parity gold official 38

cases». cases». ( Kaser, Kaser, convertibility 1970:94). , 1970: 1970:

socialist 93 ) .

CEU eTD Collection CMEA Romania countries,rejectedit member the most 1992). furiously (Curtis, i Khrushchev Nikita by made planning supranational for proposal The born. was it as soon as immediately failed planning centralized of idea The countries. individual the to requirements quantity or specialization economic c no but countries of pairs between negotiations bilateral of form the in place took plans those of coordination the and plan national a countryhad eachCMEA the In Europe. Eastern in sphere economic German the for or differentials. price the determined negotiations government but market the not economies socialist well as economies market 1980 in occurrence (Brainard, exported” is it which to country the on depending more or percent twenty vary may country one of good export given a of price ruble “transferable the that estimated been has It 79). (ibid., agreements” ev having those than greater variousmuch are to partners sold products identical of prices the in differences “the that finds Ausch countries, socialist the of system clearing mature the For country. another to exports sa the to incomparable country one to exports a of lack currencies’ The from acquired rubles, transferable the evolution. and sperrmarks the both made value parametric regime’s the of stage later the in exception i and allowed not was bloc German (Ausch, economy market a over planned 1972:159). a for government the of preference Both clearing systems as a result were strictly bilateral. Multilateral clearing in the clearingin Multilateral bilateral. strictlywere result a clearing as systems Both Strict bilateralism also meant that there wa there that meant also bilateralism Strict

n the Soviet bloc it was allowed only as an an as only allowed was it bloc Soviet the n 39

- Central EuropeanUniversity,Budapest

piig o h mre” i te ae of case the in market”, the to “pricing me amount of currency, acquired from acquired currency, of amount me s no central plan for the entire CMEA entire the for plan central no s er occurred in the history of clearing of history the in occurred er uty a te uhrt t assign to authority the had ountry n 1962 were met with rejection by by rejection with met were 1962 n 12. hl ti i a common a is this While :122). Vera Asenova

CEU eTD Collection eco international the to domestic the from transferred were rules and influence of sphere wider the to extends control domestic that mean would That systems. totalitarian both hypothetical first The regimes. exp trade international similar adopt Europe Eastern in empires respective their about visions different having and constraints economic different powers hegemonic under regional two the why did question interesting isan It Puzzle1.5. andResearch Q prices foreign and (Ibid., severed” has 76).been domestic between links “[t]he words: Ausch’s In rate. exchange the and imports and exports of prices the goods, domestic of prices the between link economic “objective” ther because overvalued as seen not were they 1930’s the of reichsmark the Unlike level. international the at equilibrium automatic thwarted which inconvertible were economies planned centrally the all of currencies the foremost and First clearing. that: trade of international conducting way one only is there planning central under remain economies domestic while o explicit the with and sector domestic the of analysis an with lanation is that they adopt the same international trade regime because they are they because regime trade international same the adopt they that is lanation nomic institutions.nomic

bi under trade economies planned centrallywhy reasons several are There 12). 1972:world economy(Ausch, and market world of type instructionsucha relations, economic plan direct on based system begin trade international of system Soviet the of investigations of majority The

i te niiul ainl cnme te ey existenc very the economies national individual the …in

under bilateral clearing. The general understanding is understanding general The clearing. bilateral under uestion 40

necessarily

novs uh international such involves r implied observation thatobservation implied r o a economic an of e ws no was e lateral CEU eTD Collection materials” of type expensive most the and volume greatest the using in interested were “enterprises efficiency, to regard no with organized was It terms. quantitative Socialism Germany existed National in bigtook to cartels power. wellbefore of tradition the However, objectives. government the to subordinate to easier are units encouraged syndi and trusts government Nazi the organized Union Soviet the reasons same the that for units industrial big and cartelization argues Temin economies. Soviet and totalitarianism does that alone clearing not a explain bilateral regime. trade non by today used still is clearing bilateral that fact The relations. economic of form specific the explain not does alone will political their but 2006:394) Scherner, and (Buchheim economy” primacy took “politics Union Soviet the and Germany Nazi both in that doubt no is There 15). 1940: (Ellis, control” exchange of extension the demanded formally towards tendency underlying an of and capital foreign to hostility a of inflation, of apprehension vague a of influences the under “possibly which unions, trade German of support the received It 1940:1). (Ellis, elaboration” of years two nearly N after governments the coalition by supported Democrat inherited “Social from was Socialists system the that notes Ellis institution. totalitarian a itself in not is it that control exchange of review the from concluded have we First, economic of purpose explanation. “totalitarianism” a to objections two are However,there abroad. the and home for powe Soviets their extend to desired the both they that doubt and no also is There war development. of purpose the for Nazis It is true that both regimes undertook total mobilization of other economies other of mobilization total undertook regimes both that true is It n h Sve Unio Soviet the In Second –

there were sufficient differences in the domestic structures of the Nazi the of structures domestic the in differences sufficient were there cates - totalitarian states such as China, India, Turkey and o and Turkey India, China, as such states totalitarian -

to acquire better control over the production sector, as bigger as sector, production the over control better acquire to pouto ws tnadzd n otu gas ee e in set were goals output and standardized was production n 41

Central EuropeanUniversity,Budapest Planwirtschaft Vera Asenova thers means thers

over the the over

general ational , also , –

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CEU eTD Collection that arguing in further even goes Aly Geotz government. Nazi the to partners willing of kind a as business big describes also 2006 Tooze, state, Nazi the by terror of use calcul rational “relinquish not did words inother Scherner, Entrepreneurs and 2006). demand state profitable (Buchheim fulfill to initiative did so and regulation state heavy despite enterprises, the of choice a de investment state; the by granted quotas the for compete could enterprises different 1943); after notably exceptions, few a (with state the from orders direct took rarelyindustry the preserved; generally was Germany bur state the by managed was where production Union, Soviet the Unlike 391). 2006: Scherner, and (Buchheim enterprises manufacturing the in remain to orders, state from generated profits, huge the allowed Nazi The value. nominal a just than more was industry German the in property private that argues 2006 Scherner, delivered interpretation Temin’s in structure incentives of kind This 1991). (Temin, objectives government fulfilling towards channeled were they unless owners of the of threat discretion the and terror of national means by controlled were managers government; resources ofallocation private mean not did Germany in property private that argue Some Union. abolition complete its and Germany in production industrial in property quality quantitywas ablemanagement alongside rewarded. and ec Nazi The 46). 1972: (Ausch, Recent research based on additional archival materials questions this thesis. thesis. this questions materials archival additional on based research Recent private of existence the is regimes two the between difference debated A ization of their assets, thus no resources could be allocated according to the to according allocated be could resources no thus assets, their of ization

the same resultsthe the same as Soviet industry nationalization of did. -

cnmc eiin wr sbriae t te ol o te Nazi the of goals the to subordinated were decisions economic ations of their of ations tt rfand rm ieped ainlzto and nationalization widespread from refrained state nm soe a eaiey togr rfrne for preference stronger relatively a showed onomy 42 cisions and the production profile remained profile production the and cisions

acay fedm f otat n Nazi in contract of freedom eaucracy, own own business affairs. Not denying the denying Not affairs. business

n h Soviet the in CEU eTD Collection mark black The miscalculations. not situations. could plans unexpected the periods, with previous of cope statistics on Based materials. of allocation miscalculated by and (Eucken 16 does economy exchange an like equilibrium, general a to tend not do they that is them for characteristic is What economies. managed administratively supply of demand and equilibrium. price competitive no was there that sense the in clear not did services or goods certain for markets Similarly, minimum. subsistence established statistically res assign would price authority central on the based estimations, plans private make to unable were households While 579). (Ibid., markets; scale; large its and production of standardization value(Temin, of 1991). theory labor the of assumptions the with line in principle” of matter a “as permanently of contr in Union Soviet task the In 390). 2006: (Scherer, officials” “a public became Germany in setting Wage good. for fixed be to not were prices German expedience”; of matter a “as done was this case Nazi the in fixed were cases consumptionrestricted in caused and famine Sovietthe Union. regimes 200 (Aly, hegemony internal unchallenged regime’s Nazi the secured that terror of threat the than benefits welfare the rather is it and lands foreign of exploitation economic and occupation wartime from also but business big only not

The black market often provided the only way to fulfill the official plans and avoid bottlenecks created created bottlenecks avoid and plans official the fulfill to way only the provided often market black The te cmo faue wr te ag aon o pbi ivsmn; the investment; public of amount large the were features common Other econom the influence to controls price used regimes Both h to regime two The 16 –

the effort to sustain the consumption levels in Germany as opposed to the to opposed as Germany in levels consumption the sustain to effort the and the use of administratively of use the and

cn e ruh udr h sm cmo dnmntr of denominator common same the under brought be can s

) Ti pit t aohr ifrne ewe te two the between difference another to points This 8). h gnrl ouain f h Rih eeie greatly benefited Reich the of population general the

43 - set prices for indirect control of the economy the control of indirect for prices set

et provided an opportunity for correcting these these correcting for opportunity an provided et Central EuropeanUniversity,Budapest

h co the ucs o cnupin p o the to up consumption for ources - xsec o pa n black and plan of existence

y. While prices in both in prices While y. ast, prices were fixed were prices ast, - driven process driven Vera Asenova

CEU eTD Collection 17 examples few a gives the to relevant German experie Eucken Walter ways. different in managed proceed can administratively economies with countries between trade Foreign regime. clearing international levelthe at when level disequilibrium prevails.the domestic administrative of system the under at equilibrium of mechanism other no simply is There other CMEA. the by devised allocation each with trade only can economies price the of devoid system, different a is economy Communist the that understanding The market. world socialist a into different markets disequilibrium to clearingintegrate system national the ideol than rather circumstances policy foreign of out arose it as organization on theGerman with Ellis based sides Eucken experience: sta of usefulness the On 1974:1). (Holzman, rationing” and bilateralism, control, exchange quotas, of effects the analyze to necessarybecame it when 1940’s and 1930’s the during theWest in situation the to ra disequilibrium “… of case a is CPE of case the that notes Holzman economies, market the of categories theoretical the system. obs frequent a is This 1948). Hutchinson,

See Holzman, 1987 and Bornstein, 1981 Bornstein, and 1987 Holzman, See iial t te ai xeine te oit dat ih nentoa trade international with dealt Soviets the experience, Nazi the to Similarly 132).1940: (Ellis, irrelevancy complete their well full knowing amusement, ironical with cons pros economic of calculation nice the regard would state Socialist National with (CPE) economies planned centrally analyzing in difficulty the of Speaking oee t However 17

the of powers economic and political the that believe to inclined am I e eta pann de nt ul epan h cniut o bilateral of continuity the explain fully not does planning central he

- ehns, rvds h sadr epaain ht c that explanation standard the provides mechanism,

nce nce the before war of East Germany: and ndard economic theory for studying exchange control studyingexchange theoryfor economic ndard .

ther than equilibrium economics. This is similar similar is This economics. equilibrium than ther ervation by scholars of the socialist economic the socialist of scholars ervation by 44

ogy, using ogy, and ommunist CEU eTD Collection hypotheses rival two to leads This operate. to continue regime the did a we perspective, this Adopting it. introduced which power, hegemonic the of fall the after regime international previous the of continuity a as but level international the into organization economic domestic the of extension domestic Communist that unlikely singlecause the ofbilateral structures are clearing trade. is it Therefore regimes. political authoritarian already state the the fact In communism. of monopoly full the under brought e b preceded to sector first the was sector trade international exchange international in clearing bilateral from however, Historically, trade. of mechanism possible only the is clearing bilateral the country each in communism to due that observation the with begin trade international regime A1.5.Case of InternationalTrade Regime Continuity of thepolicies Europeancountries. Eastbut also economic and institutions for

rcn a asl eainhp rm h dmsi eooy o h international the to economy domestic the from relationship causal a Tracing German the for relevant were policies These 1948:185). (Eucken, occur. they as disproportionalities trade out smoothing foreign of with role autarky, the of having basisonly central the on The plan to A. rather concerned be of may it plan or total the in trade the into tradeforeign for plans foreign buildits mayadministration of place the with accordance or in also B differently and case each in in differently proceed will oligopolies trade Foreign markets. or monopolies partial with or organization, monopoly private single a with or B country of administration central h nvly f h peet prah s n seein in is approach present the of novelty The h pit f iw f atr Erp ad h Gra Dmcai Republic Democratic German the and Europe Eastern of view of point the s o a ivld prah n i fc te aoiy f h suis f socialist of studies the of majority the fact in and approach invalid an not is It might be that the central administration in country A is negotiating with the with negotiating is A country in administration central the that be might It

n h 13’ drn cptls eooi srcue ad largely and structures economic capitalist during 1930’s the in 45

Central EuropeanUniversity,Budapest gain have to ask (and answer) why why answer) (and ask to have gain experience before and after WWII WWII after and before experience

that competition ruled in B's B's in ruled competition that bltrl laig o a an as not clearing bilateral g

total plan from the start, the from plan total

– Vera Asenova

continuity by by continuity

CEU eTD Collection Sovi of formation the for influential very Stalin, to advisor 2011). economic (Mommen, reparation to German the inand relation policy foreign main the was he 1930’s the 1922 Berlin in embassy Soviet the in trade of department the for and Comintern the for worked R Soviet 18 governm capitalist enabled had planning wartime that demonstrated which War” World Second the of result a as capitalism of economy VargaEugene Economist, without even punished severely was features common such of West the in planning of effect positive the to testament advocates Every sanctioned. immediately the and denied vehemently were West European East over claim colonial no had economies. Union Soviet the period, interwar the in Germany Unlike 1917. in already reasons ideological for West the with trade o abundance and size vast its to Due economy. domestic the than agenda political Soviet the on priority lower had trade Foreign relations. economic international their for strategy a or plan a strategicall a not were it If confusion. of out emerged Soviets the of planning domestic Temin the 1930’s that the concludes in economies Soviet the and Nazi the of organization domestic impliedgrantingthe it explicit a or model. valueof without Europe Eastern in regime trade established already the over taking simple a be would persistence by Continuity systematically. followed be to model a as seen Germa the adopted consciously USSR the that suggest would mimicking or emulation by Continuity persistence. by continuity and emulation

Eugene Varga (1879 Varga Eugene Continuit Second, any simil any Second, epublic of 1919, 1919, of epublic

b euain s niey o to an esn. is, oprn the comparing First, reasons. main two for unlikely is emulation by y f resources it did not need to import raw materials and was cut from cut was and materials raw import to need not did it resources f -

1964) Marxist economist born in Budapest, minister of finance in the Hungarian Hungarian the in finance of minister Budapest, in born economist Marxist 1964) after it after y organized system it would be unlikely to assume that they had they that assume to unlikely be would it system organized y arities in economic planning between the Soviet Union and the and Union Soviet the between planning economic in arities 18 s collapse he he collapse s

was publically criticized for his 1946 book “Changes in thein “Changes book 1946 his for criticized publicallywas fled to Vienna and then to the Soviet Union i Union Soviet the to then and Vienna to fled aig drc cmaio. tp Soviet top A comparison. direct a making 46

ns o cur cnrl vr the over control acquire to ents mtos te oiy was policy the methods; n

n 1920. He 1920. n - 1927 . et et In -

CEU eTD Collection abolishingconvertibility and restoringrequired full it because unsuccessful was system place. first the in about it brought that problems the aggravated also regime clearing bilateral The prices. market world above at exports extensive labor for exchange in concessions advantages for item export one in compensation offer to whole, a as relations trade international their manage to countries for way a period socialist the and period interwar the both in ext great a to economic domestic their over autonomy organization after and overnational their 1949 economic plans. of degree considerable a had 1930’s independ were countries these time peace during that remember to important also is It 1989. and 1935 between each considerably change for not did system country clearing the on dependence and market world the from isolation trade clearing Soviet of share the with coincides exactly trade clearing German of share The 1980’s. the through 1930’s the from constant remains countries European East the of each cosmopolitan a of “errors admit (Hahn,1982:orientation” 92). to and claims his conserv deny to of pressured was The author eyes socialism. under possible the only was planning in that insisted controversy who administrators, serious a was which revolution, a without overcome be could contradictions internal its and reformed be could capitalism that implied views His socialist”. more “become to thus and economy It is an interesting observation that the share the that observation interesting an is It The present thesis argues that the continuity of the bilateral clearing system was system clearing bilateral the of continuity the that argues thesis present The The currency inconvertibility became stricter and any attempt to reform the reform to attempt any and stricter became inconvertibility currency The rne i aohr t srk das o mltr eupet n political and equipment military for deals strike to another, in granted ent promoted by East European states themselves. This system offered system This themselves. states European East by promoted ent –

o Blai i i ams 6 perce 60 almost is it Bulgaria for

Central EuropeanUniversity,Budapest

of clearing trade in total trade for trade total in trade clearing of t Ti sos ht h relative the that shows This nt.

ent states states ent tv Communist ative Vera Asenova -

n the in

CEU eTD Collection trade international same with regime countries. other adopt centrally should they predict not do as economies controlled administratively or planned similarities their However, nature. totalitarian their very of are virtue regimes by two similar the that assumed often is it limited, very are regimes trade exchangesimil these of studies historical comparative rates.While exchange multiple but fixed foreign on relied regimes Both and trade foreign of balancing bilateral trade, foreign of monopoly state inconvertibility, bloc. political a exchang within and them country among each in autarky and industrialization pursued Soviets the bloc, autarkic an as planned was and Europe Eastern in periphery agrarian the and vis economic goals global political different served they and different structures economic domestic and of conditions out emerged regimes The 1991. until modifications adopt Union Soviet The War. World Second the during exploitation economic of instrument 1933 period the in Germany by used was regime This regimes. trade clearing bilateral built they payments and withmechanism Eu Eastern trade very international similar to resorted Union Soviet the and Germany Nazi empires, their build to planned they Conclusion unti politically ready not were countries socialist the which for change regime a plan, the

- à l 1990. - Despite the differences in ideology, domestic structures and the ways in which which in ways the and structures domestic ideology, in differences the Despite While the German economic sphere was based on the industrial coreindustrial the on based was sphere economic the German While vis ed the regime officially in 1949 to 1956 and continued using it with some some with it using continued and 1956 to 1949 in officially regime the ed

partner states. partner

- 99 s mcaim f ecfl cnmc xhne n a an as and exchange economic peaceful of mechanism a as 1939

rope, namelyrope, –

the Reichthe the ar e CEU eTD Collection t to arrangement international previous a from thebut sphere from international the much to domestic so not over carried was regime the that argues It regime. centered Germany a from continuity institutional of case a Europe Eastern in practice trade clearing bilateral the presents thesis the Therefore same. the being period postwar early the in Union Soviet the of that and 1930’s the in Germany of share trade relative the with 1989 and 1935 between stable remarkably remai countries European East of trade total in trade clearing bilateral of shares the that evidence the by suggested is This country. partner each of interest and willingness of convergence it to related the institutions. and states subordinate the and dominant the between interests of convergence the through achieved was Continuity broadly. more i of and case this in regime clearing bilateral a of functioning the he he next. This extension of control is by no means automatic and its degree depends on the on depends degree its and automatic means no by is control of extension This The following chapters explore the hypothesis that domestic structure matters for for matters structure domestic that hypothesis the explore chapters following The

Central EuropeanUniversity,Budapest - etrd eie o Sve Union Soviet a to regime centered nternational regimes nternational Vera Asenova

as ns -

CEU eTD Collection willingnevertheless and autonomous trade partners. cooperate to power bargaining weaker had which relationship, hierarchical a in states small as conceptualized are They 1939. and 1931 between countries European East the of participation active the with advanced and cl Germany bilateral the of narrative historical a and authority Reich. German Bulgaria selection study aof The justified. and for case isdiscussed t defined exploitation economic than with that sides explanation the theory and regime economic hierarchy rather literature the abused Germany whether “normal economic practice” or gain; economic mutual for opportunity provided or exploitation economic of form a was regime German the whether on debates the political the the choices and supplies and purchases German on dependence of degree the regime, trade clearing bilateral the in participation for motivations and expectations build I 1931 period the during areHungary, Greece, states. Bulgaria, Yugoslaviasmall These Turkey and Romania, Chapter 2: Chapter h aayi rss n hois f irrh i itrainl eain ad the and relations international in hierarchy of theories on rests analysis The the on focusing by clearing bilateral of discussion the continues Two Chapter The chapter is a synthesis of theoretical approaches to trade power and and power trade to approaches theoretical of synthesis a is chapter The

a concise narrative of the economic positions, political relations with Germany, Germany, with relations political positions, economic the narrativeof concise a se countries made regarding giving up authority to a big state. I review review I state. big a to authority up giving regarding made countries se Literature Review, Theoretical Framework and Review,Literature Theoretical Framework - 1939. First, I provide a working definition of small states, then states, small of definition working a provide I First, 1939.

acted rightlyacted hegemonnatural the in as theregion. Case he relationship of Eastern Europe with the the with Europe Eastern of relationship he

Selection 50

vis aig eie rmtd by promoted regime earing - à - vis

emn b Germany

t were ut

CEU eTD Collection others Canadaamong of Bank England the of and Bank the byadopted 20 19 have and states big by advanced exchange international of rules leading the of countries. practices good the emulate they rather innovation, institutional of exports. price are they trade international of terms In system. monetary international the design they do functions lending international perform not do currencies, main of issuers not are states small typically, policy monetary of terms In borders. their outside influence policy to available resources economic of value the and arena political international the on influence of degree the to refers it but capability military into translate directly which size, population or area geographic great powers,not are: which are that countries the all as defined been have powers” “minor literature security the In area. geographic or capita per GDP size, population as such factors measurable state. small absolute providing a at made been constituteshave Attempts what on consensus theoretical sufficient not is There 2.1.

There are exceptions are exceptions There With some With

hs eiiin s biul bsd n Smallness on based obviously is definition This years. given the for list this on not Singer,2001:12) are that states those all are powers Minor on. 1899 from States United the on; 1816 from Kingdom United the 1945and1990 on; USSR Russia the from or from to 1925 to 1895 from from Japan 1943; 1918, to 1860 from to Sardinia or Italy 1816 on; 1990 from from and 1945, Prussia or Germany on; 1944 from and 1940 “ In the context of political institutions small states are rarely small are states f contextpolitical institutions the In of Austria DefinitionofSmall States Hierarchicalin Relations

- takers due to the relatively small amount of their exports as share of world of share as exports their of amount small relatively the to due takers 20

exception here as well, inflation targeting was was targeting inflation well, as here exception They are recipients of international regimes, that is they comply with the with comply they is that regimes, international of recipients are They - ugr from Hungary

Switzerland, Hong Kong and others and Kong Hong Switzerland,

86 o 98 Cia rm 90 n Fac fo 11 to 1816 from France on; 1950 from China 1918; to 1816

51 - aes Sma makers.

Central EuropeanUniversity,Budapest definitions based on a threshold of threshold a on based definitions . introduced by New Zealand in 1989 in Zealand New by introduced

1816 to 1917and1816 to 1922fromon; ll states have very limited limited very have states ll os o rfr ipy to simply refer not does

(Hammond, 2012:7) (Hammond, ound at the atthe forefrontound very limited power limited very ” (Krause and and (Krause ”

Vera Asenova .

19 , nor nor ,

and and

CEU eTD Collection Macedonia. of Republic Yugoslav thewith Former 21 of level the is states small and big between difference significant A 2001:64). and (Mosser, powers” stronger larger by encroachment against economically or militarily either themselves political, and economic relationship, a twobetween countries. of course the in or exercised is it which quantitatively contextmeasured political capita, byin “size” per is defined the GDP as p and economic their to according change. social of drivers sufficient not were alone they but present were factors Domestic hegemoni in changes by largely about brought were which kind, democratic and totalitarian authoritarian, monarchic, of states nation to empires, multiethnic from regimes political of variety a seen has t the example For conflicts. military in side a hegemonic taking avoidin power to or themselvesshifts isolate from to capacity the have not do general in states Small abroad. from imposed change sourceof political“constant (Georgieva, weakness” 1997). a and as seen often is Economic underdevelopment Economic interdependent. states. are factors political big of institutions the than factors external on dependent instituti domestic their or abroad to from imposed vulnerable change are institutional they terms political in resources insufficient to due vulnerable are states small terms economic in While borders. their outside politics influence to

F or example example or s rsl o politi of result a As n su One terms relative in defined are states small study present the of purposes the For

Greece h eiiin f ml sae i bsd n hi ”nblt t protect to ”inability their on based is states small of definition ch

is a small state in relation to Germany but acts as a big state in its relations its in state big a as acts but Germany to relation in state small a is 21 uhrt te hv oe ter w plc o te ere of degree the or policy own their over have they authority

a wans, ml sae ae ucpil t institutional to susceptible are states small weakness, cal

eteh etr hsoy f atr ad eta Europe Central and Eastern of history century wentieth pwr ahr hn y rl dmsi revolutions. domestic truly by than rather power c olitical “size”. Unlike economic “size”, which can be can which“size”, economic Unlike “size”. olitical 52

n ae more are ons CEU eTD Collection 1985). general (Katzenstein, see Switzerland, and Austria of cases the On spec their changing without states welfare and policies industrial their of adjustments flexible through shocks economic external absorb to tend states democratic and 22 countries, the between imbalance power huge the despite First, conditions. two fulfill numbe a and and power great a between cooperation bilateral of regime Central a or regime, international hierarchical a of within developed Depression countries Great the the after Europe and Southeastern Germany between interdependence The EconomicExploitation or Economics 2.2. is itthat statesaround, exists because allowexist”to it a neorealist the follows thesis The policy. state constitutes itself in which authority, violence. of threat without compliance extract to capacity and authority power’s great the on in great relationtostates a power. small the of choices political the constitute what are benefits certain expecting and state both condition economic and as policies understood state small the of structure domestic the of change as a as seen is benefi economic for exchange in areas policy certain over authority national up give often They unfree. constantly are states small that however, mean not does This represent. choices their freedom ssumption that “interdependence derives from state policies not the other way way other the not policies state from derives “interdependence that ssumption

Not all smal all Not

Such a relationship is hierarchical but not necessarily coercive. It can be bas be can It coercive. necessarily not but hierarchical is relationship a Such TheGerman O 22 r of small states. In order to define the relationship as hierarchical it has to has it hierarchical as relationship the define to order In states. small of r

l states are equally ready to accept foreign hierarchy. hierarchy. foreign accept to ready equally are states l Allowing foreign influence of domestic affairs is an an is affairs domestic of influence foreign Allowing legitimate influence or rule ( rule or influence legitimate

fferfor Eastern Europe in the1930’s

ts or political protection provided by a big state, which state, big a by provided protection political or ts s. The tradeoffs between allowing external influence external allowing between tradeoffs The s.

(Katzenstein, 1984) and on small industrialized states in in states industrialized small on and 1984) (Katzenstein, 53 Lake, 2009). 2009). Lake,

Central EuropeanUniversity,Budapest inHardTimes? This influence can be observed be can influence This (Gourevitch, 1978: ific mode of industrial organization. organization. industrial of mode ific Small but advanced industrialized industrialized advanced but Small

xenl os of loss external – Vera Asenova

894).

CEU eTD Collection economic international the perverted not had party, Nazi “the reading his In 1945:v). “the theorize leverage” and to pressure political of means a countries as trade using of possibility European East small with trade German of example Trade, Foreign of Structure the and Power National Hirschman O. Albert by made trade international of politics the to contribution theoretical these regime were concepts irrelevant. its tra of of of terms terms and efficiency system in economic discussed new still was a it However was payments. and Europe trade international Eastern with cooperation economic German of practice previously established the the to opposed As of advantage. unfair gaining of violation purpose the for a trade international as Europe Eastern with methods trade German denounced economists British relevant. policy and normative highly was methods trade a German the from of discussion experts the position, policy liberal classical and practitioners economic by Advanced standard. gold the under convertibility currency and capital and goods of movement free on based the from break qualitative a was it economists For science. givingmotivation for authorityGermany? to up benefi to expectation the on based voluntarily, it adopt they did or partners, its onto regime clearing bilateral the force Germany did therefore is question The demonstrated. results. Seco desired its achieving for coercion to resort not should state dominant the nd, a positive acceptance of the latter’s authority by the small state should be should state small the by authority latter’s the of acceptance positive a nd, h bltrl laig eie asd eae i bt eoois n political and economics both in debates raised regime clearing bilateral The German economic policy in interwar Eastern Europe is the case in an important an in case the is Europe Eastern interwar in policy economic German t from it. Apart from the expected benefit was there any other positive positive other any there was benefit expected the from Apart it. from t

egig re aia fo ad re rd udr h gl sadr the standard gold the under trade free and flow capital free reigning e ee tog i te otx o te clearing the of context the in though even de, 54

(Hirschman, 1945). He uses the uses He 1945). (Hirschman,

rvos rd regime trade previous

( Hirschman, at first first at

in his his in CEU eTD Collection “Bloodless Einzig’s Paul methods trade German the to opposition heated a In matter. su its with concurrently emerges debate the of generation first The generations. different three in unfolds which 1930s, the in emergence its since debate of matter structures economic of i.e. countries theythe trading exogenou are deeper the in found be to on are regime trade trade the of sources of the while power effects political the understanding on concentrated is analysis Hirschman’s their to limits additional poses which other, each with trade not do exportsimilarstructure, a to countries,due poor The relationship. dependency a into countries the ties which specialization, product certain a in results countries (or economic physical) (Ibid., viii). punishment” accept to “willingness country’s dependent the on conditioned also is dependence o for weight higher a has trade of quantity nominal same the Because 30). (Ibid., cent per 5 than less be could one small the with trade the country big the for time, same the on of and market the on concentrated exports its countries has usually country poorer The traded. goods partner of terms in both trade, diversified more a has i that one the result differences usually is These country richer The concentration. trade countries. and trade from gains asymmetric agricultural and industrial small, and big poor, and rich between asymmetries existing to due one realistic a not is trade free beneficial mutually of type economic ideal the view his In exists. regime trade 13) (Ibid., act” “political a as trade international potentialities” its of one on capitalized had they system, e big country, which can be more than 50 per cent of its total foreign trade. At trade. foreign total its of cent per 50 than more be can which country, big e e lo ons ht h dfeec bten industrializ between difference the that points also He h ntr ad oiain bhn te emn laig eie ae en a been have regime clearing German the behind motivations and nature The e onr ta fr h ohr a eedny eainhp cus This occurs. relationship dependency a other, the for than country ne 55

Central EuropeanUniversity,Budapest

no matter what kind of int of kind what matter no

( Ibid., vii). Hirschman defines Hirschman vii). Ibid., foreign trade orientation. trade foreign d n agricultural and ed s his to analysis. Vera Asenova ernational bject

CEU eTD Collection 23 the on effects economic its about debate a essentially was beginning, very its from most and ability, organizing important and resources “industrial established its newly with these states of European problems economic the to solution a provide could justi oftotalitarian means commercial policy that: He finds (1943:2,3). by empire” economic German the for sufficiency self greatest the attaining of aim the the to and disadvantage of the weaker party” (Einzig, 48). 1938: wish the against but parties two the between understanding mutual by not achieved co gain to methods artificial highly introducing trade international of system the perverting was mechanismThis predator.a as behave to and then states weaker entrap to Germany currenc re by markets international other of out them clearing force bilateral the honoring without to and underdeveloped peripheryagrarian the of economies the keep to agreements, resources extract to Europe, Eastern countries agricultural vulnerable and small the exploit to mechanism a is system clearing The states. small the of exploitation as practice this sees (1938) Invasion”

See Guillebaud, 1940: Guillebaud, See idb tearclua udreeomn o te ein n ta ny Germany only that and region the of underdevelopment agricultural the by fied able dictate to foreignexchange rates favorable to herself(Basch, 1943:3). being of position the reached finally and, system, market world the from countries discusses Basch Antonin Likewise, It can be inferred therefore, that the debate on the German clearing system, system, clearing German the on debate the that therefore, inferred be can It economies.(Basch, 1943:2) organizingtheir responsibilityfor automatically sole notentail does countries, other is Europe Eastern in dominance German that view the against argues Basch y at much lower prices. Einzig saw the bilateral clearing system as a way for way a as system clearing bilateral the saw Einzig prices. lower much at y - mparative advantage (Einzig, 1938). This type of bilateral trade “has been “has trade bilateral of type This 1938). (Einzig, advantage mparative of products the for market natural important an is country one that fact The t of level price the divorced Germany prices, inflating By

natural e natural

xportthe timeshared Many market”. scholars at position. this 449 - 60 and Cole, 60 Cole, and

1942 as cited in Basch, Basch, 1943. in cited as 1942 the clearing bloc as an area “organized with with “organized area an as bloc clearing the 56

- exporting their products for hard for products their exporting

ee agricultural hese

CEU eTD Collection Table a having her to led agreements (Ellis,ofmonopoly her 1940:107). segments significant partners’ in markets” clearing the of exploitation clever by herself monopson earlier “the that Ellis echoes by arguments view This region. the in policy foreign and economic broader a of aspect an as understood be only can trade of terms Therefore not. or advantageous So individual with Germany of trade of terms aggregate the Therefore, Bulgaria). and Romania both in (wheat quantities large buy to offered Germany importers, other to compared prices o low for prices very paid but prices world Bulgarian agreements. than higher offered as Germany oil clearing such Romanian and tobacco products the targeted certain through for that trade shows 1973 of Kindleberger, terms its improved significantly G that argues Child Frank trade. from gains measuring of the method preferred was trade of terms German the Estimating much. how and arrangement this from gained really Germany if is asked question new the 1958:150) (Child, market” monopoli for device “a as seen still is system the While 1970s. small (Ritschil,exploiting2001:324). states the 1943 Basch, and 1940 Benham, 1940; Ellis, and 1938; Einzig, between debates Early states. small This view persisted into the second generation of the debate during 1950s and 1950s during debate the of generation second the into persisted view This

1 . Terms. ofTrade. Germany'sTermsof Trade, 1928 ther products that had little little thatther products alternative had lower markets. buying at Where

cetd n rhdx nepeain o te emn oiin as position German the of interpretation” orthodox an “created tes Erpa (E) onre cno b qaiid as qualified be cannot countries (SEE) European utheast

istic position, which Germany had created for for created had Germany which position, istic 57

Central EuropeanUniversity,Budapest - 1938

stic exploitation of the of exploitation stic

Vera Asenova

ermany

CEU eTD Collection and exporting continue accumu to or balanced were accounts the until exporting stop to either were from, choose could they alternatives, The recovery. economic stimulate to policy monetary used and economies domestic their over control full had directly policy active as states small the discusses He Reichsbank. the with accounts blocked its handled country smaller the into paid was it because the accounts of blocked country it” who 19 (Neal, issued … money funny of product the are bilateralism under trade of terms calculated “the because agreements” clearing bilateral of conditions problems theoretical “serious the out points Neal position. monopoly/monopsony its exploit not did Germany that conclude Benham, 1940 with line in Neal, evidence this From Depression. Great the of downfall ec German the with Romania increased and Hungary of trade of terms the time same the at respectively; 1935 them with agreements clearing the of conclusion the after decreased te the higherthan relative importprices or the terms of trade are improving. or imports of are prices export relative the that prices means 100 than higher number a Respectively,worsened. relative the than lower is the of prices exports of relativeprices relative the the that means to 100 than lesser exports number country’sA imports. country’s a same of prices relative the of ratio the is Trade” Affairs, Source: Romania Hungary RomaniaWith HungaryWith h tbe hw ta Gra trs f rd wt Hnay n Romania and Hungary with trade of terms German that shows table The The key aspect of the bilateral clearing in his view is the way the central bank of bank central the way the viewis his clearingin the bilateral of aspect key The

South Neal,1979: 396, basedon data from the RoyalInstituteof International aig lce ses xetn te wud e vnuly ad I te latter the In paid. eventually be would they expecting assets blocked lating SoutheasternEurope's Terms of Trade with Germany,1929

- atr Erp, Pltcl n Eooi Survey Economic and Political A Europe, eastern

1929 1929 100 100 100 100

1930 1932 69 98 28 70

nmc xaso es fr h frt ie fe the after time first the for east expansion onomic 1931 1934 - makers who although unable to influence Germa influence to unable although who makers 49 93 33 70

1932 1935 58 56 93 45 73

n esrn trs f rd udr the under trade of terms measuring in

1933 1936 56 90 50 51

m o tae o te onr have country the for trade of rms

1934 1937 102 54 43 54 79:393).

1935 1938 111 13) p. (1939), 63 19 55

1936 1937 108 63 – 9. Trs of “Terms 197.

in 1934 and 1934 in

1937 102 77

ny CEU eTD Collection 24 a to not but system trade international the of disintegration the to contributed bloc well theFirst before World War. Germany with trade on dependent was Europe Eastern that finds Ritschl Additionally of sense the in g steadily exploitation does … country given a of occupation military after “Only resources. real extract to able not was alone mechanism clearing the that finds t ability “Germany’s as exploitation of definition a gives Ritschl 2001:4). (Ritschl, powers” western the with relations financial from retreat selective a largely was 1930’s the 1940 and Germany 1938 of exchange between secret balances foreign the of analysis Ritschl’s Albrecht material. archival of analysis econometric thorough hypothesis exploitation available means recovery” economic 1 financing for (Neal, best the them “offered interpretation Neal’s in system clearing The mark. clearing the of rate exchange high the sustained and Germany with surplus export an had Reichsmarks, blocked the by only backed money who Yugoslavia, clear to and balance the for waited Romania of policies conservative the and importers, from deposits available of advance in Germany to exporters their refinanced who Greece, importingreceive revenue their from the country. they until exporters its credit to had country exporting the of government the case

On the domest theOn h rnwl f h dbt i rcn yas teps o re to attempts years recent in debate the of renewal The expansionist the between distinguishes Neal Similarly, Eichengreen and Irwin (1995) demonstrate that the bi the that demonstrate (1995) Irwin and Eichengreen Similarly, o attract real resource transfers through the system of clearing accounts” and accounts” clearing of system the through transfers resource real attract o

rowing foreign exchange deficit become clearly visible.” (Ritschl, 2001:14) (Ritschl, visible.” clearly become deficit exchange foreign rowing suggests that instead of exploitation of the small “German autarky policy in policy autarky “German small the of exploitation of instead that suggests ic sources of these differences see Janos, 2001 and Grenzebach, 1988. 1988. Grenzebach, and 2001 see Janos, these differences of ic sources

24 . The refinancing The .

Central EuropeanUniversity,Budapest

option, which option, was only available to countries that countries to available only was policy of Hungary, Bulgaria and and Bulgaria Hungary, of policy 979:393). 979:393). was similar to issuing to similar was

lateral clearing clearing lateral - Vera Asenova xmn the examine

CEU eTD Collection analyze statistics, trade on short primarily the based comparatively are which studies, reviewed the was country small a in exporters pref most Reichsbank’s the towards with congruent bank central the of policy the how demonstrating by the followingchapters indemonstrated Germanybe willof interests (Kirshner 1995). accumulated states small the that accounts frozen in balances uncleared the to due relationship, bilateral the exiting of cost the higher the conducted, being was trade more The bloc. th from wealth of extraction silent a for allowed This interest. Germany’s with harmony in preferences their alter to and neighbors small its entrap to was 1930s the in policy economic foreign Germany’s of objective main the in states exercisea it”(Kirshner, to available position coercion economic of instrument potent most the be should power“monetary argues, Kirshner Therefore, 1995:277). (Kirshner, influence“ of forms other do than friendly the which with states coerce to opportunities of number greater relatively a provide may power “monetary occupation military of case the in exploitation Unlike power. monetary exercising of form a as system clearing bilateral agreements. clearing bilateral the to not and block the within stability exchange rate to attributed is This 1995:3). Irwin, and (Eichengreen predict” would characteristics economic “other worl the of rest the with and other each with trade bloc reichsmark the in countries that find also They Germany. towards reorientation trade significant n otat a es uniaie prah y J by approach quantitative less a contrast, In h mcaim f alteri of mechanism The

- term economic effects of German trade relations with with relations trade German of effects economic term

ng the interests of the small states in line with the the with line in states small the of interests the ng 60 erred way of financing its imports. All of All imports. its financing of way erred

nta Krhe aaye the analyses Kirshner onathan prpey o h cr o the of core the to periphery e 1995:31). In1995:31). interpretation his oe tt i traditionally is state home d less than their than less d CEU eTD Collection state’s integration degree witheach of economic Germany. of view of point the from policy foreign and monetary the of question the approach I alongsi level state the at decided were payments and trade international agreements clearing bilateral the of context the in because goals policy foreign to related strongly is cases these in policy monetary of for preferences different things other among reflect which regimes, monetary different adopted Hungary and Yugoslavia Romania, Bulgaria, Europe Southeastern In point. clearing the as Germany used the as states European East the all and center the in Germany with structure cartwheel a with arrangement an but circulating freelywas reichsmark the where area an not was SterlingArea, the and Germany with resisting strategiestheir of pressure. German on as well as states smaller the by derived agreements clearing the from benefits the study They assumption. this to exceptions are (1986) Lampe (1986), Berend (1988), Grenzebach (1983); Ranki (2007); Wien, rules. trade foreign German the of receivers passive as assumed usually are They agreements. po the on done been has research little but policy trade this through Germany by pursued ends the on literature extensive is There 2.3. of traderelationsthese effects understa based singleon a studycase over time. to contributes thesis present The Europe. Eastern

The different small states in Eastern Europe had different levels of integration of levels different had Europe Eastern in states small different The TheSmall EastEuropean States adopted different monetary regimes. The reichsmark bloc, unlike bloc, reichsmark The regimes. monetary different adopted spokes, which did not transact directly with each other but other each with directly transact not did which spokes, integration with the German economy. The role role The economy. German the with integration de with monetary and foreign policy. Therefore Therefore policy. foreign and monetary with de 61

Central EuropeanUniversity,Budapest

sitions of the smaller partners in the in smallerpartners the of sitions

positions, motivations and motivations positions,

dn te long the nding

Vera Asenova - term

CEU eTD Collection increased whole a as Trade whole. a as region the with and countries the of each Source: Table thatwithbalance Germany one, each had the the amount higher of assets. blocked commer the to proportionate be would which Reichsbank, the at country each of accounts the in reichsmarks blocked the of level the with approximated be can countries, the of economies the over influence of degree The country. each of exports and imports Total Exports Total Imports Total Turkey Romania Yugoslavia Hungary Greece Bulgaria Total Balance Total The table shows that Germany had a generally negative trade balance with with balance trade negative generally a had Germany that shows table The Balance Balance Balance Balance Balance Balance 2 Exports Exports Exports Exports Exports Exports Imports Imports Imports Imports Imports Imports cnmc nerto cn e esrd y h sae f emn i t in Germany of share the by measured be can integration Economic

Germany's. Trade Southeasternwith Europe, 1929 il rdt xedd o emn b te. h getr h ngtv trade negative the greater The them. by Germany to extended credit cial

Ellis, 1940: 102.

1929 Europe, Southeastern with Trade Germany's 164.1 211.0 152.6 146.8 103.7 657.5 591.7 - - 1929 72.5 75.6 46.9 91.7 60.9 57.5 89.3 26.9 76.8 44.7 51.2 - - 65.8 6.5 3.1

555.2 629.8 137.3 236.9 172.1 118.3 108.1 - - - - 1930

20.7 48.3 69.0 99.6 97.3 74.8 36.2 82.1 51.8 56.3 36.0 22.9 58.9 - 74.6

102.4 401.3 368.9 - - 1931 47.4 52.6 92.5 55.0 95.1 40.1 29.2 84.4 55.2 13.7 56.6 70.3 23.0 25.3 48.3 - - 32.4 5.2 9.9

230.2 273.8 - - - 1932 58.9 13.7 20.8 34.5 31.0 40.1 10.2 64.2 74.4 13.8 43.3 29.5 11.0 47.4 36.4 35.4 23.5 - - 43.6 9.1 62 (in million reichsmarks) million (in

190.6 236.4 - - 1933 53.4 13.7 17.7 31.3 36.3 37.9 46.0 46.1 33.8 33.5 38.1 34.2 34.7 18.7 - - - 45.8 1.6 0.1 0.3 3.9

221.5 315.7 - - - - 1934 55.3 14.4 19.3 33.7 16.6 50.9 67.5 50.9 59.0 31.5 36.3 24.3 39.6 63.9 26.0 29.3 - - - 94.2 8.1 4.8

1938 1938 319.9 412.5 - - - - 1935 58.5 39.9 41.4 26.1 67.3 93.4 16.1 63.8 79.9 24.5 36.9 61.4 15.0 62.9 77.9 49.1

- - - - 92.6 1.5 9.4

1938.

454.3 505.4 118.5 103.6 - - - 1936

68.4 10.0 47.6 57.6 39.1 79.4 11.3 92.3 77.2 75.2 10.4 83.0 93.4 63.5 - - 51.1 2.0 4.9

666.8 671.8 111.1 129.5 179.5 134.4 132.2 110.5 114.1 113.1 - 1937 76.4 68.2 71.8 13.3 97.8 50.0 36.7 - - 3.6 2.2 3.6 - 5.0

695.7 651.9 151.4 116.0 148.8 140.4 118.0 107.9 110.0 109.7 111.1 - 1938 35.4 10.1 17.5 93.6 27.9 56.4 84.3 43.8 8.4 0.3

CEU eTD Collection Figure Figure 2 following and 3. 1, Charts Yugo and Bulgaria of positions the along was Greece while integrated least the was Turkey economies. their to in penetration economic German extent greater a to resisted Romania and Yugoslavia while trade and Bulgaria integration of signingclearing of the and was into surplus turned agreements only 1938. in pre the surpassing exports and level19 in depression imports both with 1930 in drop initial the after

The share of German exports in the total exports of the In order of their degree degree their of order In the of exports total the in exports German of share The Source 2 1 . to Exports Germany percentages oftotalexports. as . fromImports Germany as 10 20 30 40 50 60 0 : Spasichev,1936: 556. 26,1 1925 - 1929 Exports to Germany as percentages Exports as topercentages Germanyofexports, total 17 21,2 37. The trade deficit of Germany with the region increased after after increased region withof Germany the tradedeficit The 37. 8,8

Hungary were the most dependent countries on German on countries dependent most the were Hungary 30,8 1930 - 1934 14,8 19

11 percentages of totalimports.percentages 1925 63

48,6 Central EuropeanUniversity,Budapest lva Ti i prily vdn fo the from evident partially is This slavia. - 16,5 1936 1935 29,2 17,7 47,6 20,7 1936 35,5 23,7

Vera Asenova Yugoslavia Greece Romania Bulgaria

CEU eTD Collection country Germany with integrated most three the the was from Bulgaria evident charts, as but countries the all for partner trading single biggest Source: oftotaltradepercentages in 1938. Figure 10 20 30 40 50 60 70 10 20 30 40 50 60 70 0 0 Source y 98 emn hd curd rd hgmn i te ein I ws the was It region. the in hegemony trade acquired had Germany 1938 By 3 Ellis,based 1940: 111, on . Germany's trade foreign in the ofSoutheastern share as Europe 57,8 Bulgaria 1925 - 1929 21 63,4 : Spasichev,1936: 557. 22 Germanimportsasshareandexports oftotal imports andexportsSoutheast countries,of 1938European 8,3 Imports from GermanyImportsfrom asof totalpercentagesimports, 12,6 Romania 48,3 35,8 27,6 1930 - 1934 23,2 31,9 Greece 10,9 43,1 17 Reichsdirektgesellschaft (Berlin, Reichsdirektgesellschaft 1939).

Yugoslavia 50,1 53,5 64 24,2 1925 1935

49,9 18,4 - 1936 Hungary 48,3 16,6 50,1 61 39 1936 22,5 Exports to Germany Imports from Germany 27,3 Wa wr the were What . Yugoslavia Greece Romania Bulgaria

CEU eTD Collection eurd lo rsrcie icl oiy Cern areet wt Switzerland, with agreements Clearing policy. fiscal restrictive a also required stability Dinar’s Francs. Swiss 7 equal Dinars 100 of level the at Franc Swiss the and 1933 in policy stabilization monetary a undertook Yugoslavia Yugoslavia 2.3.1. German economic the in sphere Yugoslavia the in in followingis traced part. hegemony German growing The countries. CMEA the with regime Yugoslavia clearing bilateral Turkey, and Greece Unlike the arrangement. of out CMEA Yugoslavia left Stalin and Tito between conflict 1948 The War. World Second the of end the after trade of regime clearing bilateral use to continued it and bilateral the of clearing regime. case. Turkey similar isa continuity the of question research the of outside falls it because study present the in included not is and Assistance Economic Mutual for Council part not is Greece however policy clearing German the discuss they when providenecessary the As 2000 demand. Janos, summarizes: the of states smaller the nor powers, great the neither because scarce were alternatives Such region? the in countries the of each for market German the to alternatives the were what and integration trade of levels different the for reasons 66 o 79 ecn fr ugra Ygsa tae ih h avne capitalist advanced (Jacksonand Lampe, 1982: 366 cited in the with stagn trade Continent the Yugoslav of Bulgaria. nations for percent 17.9 to 36.6 Romania;of case the percent17.8from in Hungary ofto 61.1 case(ibid.), from the significant fell countries eastern most and countries those between trade Indeed Europe. northwestern the ofsocietiesadvanced the in markets new find not could region the of countries the p its of intra sixth 1918 After so economies. producelocal agricultural the of of most buyers for the vital as act to not especially and region the for oh psce ad li icue ree n h Suhat uoen region European Southeast the in Greece include Ellis and Spasichev Both Yugoslavia was highly integrated with the with integrated highly was Yugoslavia partner trading viable a be to position a in was France nor England Neither re - World War I volume (Hertz, 1970:83). Except for Czechoslovakia, for Except 1970:83). (Hertz, volume I War World ly: from 46.6 to 18.8 percent of the total value of exports in exports of value total the of percent 18.8 to 46.6 from ly: td t rud 0 ecn o te ains exports nation’s the of percent 10 around at ated 65

Janos,2000:201

Central EuropeanUniversity,Budapest

German economy during the 1930’s the during economy German

- regional trade fell to one to fell trade regional - 2).

otne t use to continued

fixed the dinar to dinar the fixed Vera Asenova

region could region f the of -

CEU eTD Collection 223 Dec.34 Figure Source: dinars). Table dinarsinDecember million to 1934 400 dinars inDecembermillion 1935. Yugosl to Germany by owed debt clearing the year next the Within Germany. with balance export positive a had Yugoslavia year That 1934. in partner trading biggest the became quickly Germany 2007 (Gnjatovic, commodities agricultural key of agreements export clearing the The maintained 1940:105). (Ellis, dinars” million 100 of balance credit was Germany with agreement clearing initial The 2007:33). (Gnjatovic, flow trade growing clearing while Austria and trade Italy Germany Yugoslavwith agreements total of percent 2 to down was France with trade quote 2000:202 Janos, volume. in declined drastically France and Belgium

signed in 1934, which had the functions to enforce “the liquidation of a German a of liquidation “the enforce to functions the had which 1934, in signed

3 4 debtGermany's . Yugoslavia, clearing 1934 with 300 Apr.35

Ellis,107. 1940: 105, . Germany's debttoYugoslavia, clearing 1934

260 Jun.35 4) Atr h Lau o Ntos moe sntos gis Italy, against sanctions imposed Nations of League the After :48).

320 S ep.35

avia almost doubled. Table 3 shows its growth from 223 from growth its shows 3 Table doubled. almost avia

362 Nov.35

400 Dec.35 66

–

the main trading partners, enabled a enabled partners, trading main the 465 Mar.36

327 Dec.36 - -

1938. - rns lr ad wheat and lard prunes,

1938 (in million

415 Mar.37

177 Dec.37

that s 400 Dec.38

CEU eTD Collection like Yugoslavia, of economy agrarian the for items important included strategically Purchases years. two first the in items export Yugoslav of prices higher and items bargainingYugoslaviaimproved of position (Ibid.). 12.83 between levels at set was Mark the and without periods waiting was private clearing allowed 1936 106). In (Ellis: 1940: percent reached 30 payments and fees clearing including terms real in which clearingrate November the increased the discount improve In balance. to 15 percent, not did this but rate discount percent million 4 a at bills mark clearing exporters’ of 14.6 sale the reached Reichsbank the of at thesame theMarch In summer Yugoslav in 1935. reichsmarks government balance account clearing frozen The at kept 1940:106). Yugoslavia (Ellis, latter” the overvalued admittedly non as well as commercial includes commercial debts. debt clearing the because reichsmarks in The valuesare the different trade balance, presented aboveNote: from valuesfor the Source:

million dinars

emn rd plc i Yu in policy trade German 100 150 200 250 300 350 400 450 500 50 The official rate of the mark was initially 17. initially was mark theof rate official The 0

Ellis,107. 1940: 105, 12/34 04/35

Germanto clearingdebt Yugoslavia 06/35

09/35 olva nldd oe pie o Gra export German of prices lower included goslavia 11/35 67

Central EuropeanUniversity,Budapest 12/35 –

14.50 dinars per mark as a result of of result a as mark per dinars 14.50 6 dinars for one reichsmark, “which “which reichsmark, one for dinars 6 03/36

12/36 03/37 12/37 Vera Asenova permitted 12/38 interest -

CEU eTD Collection agre Clearing Romania. to concessions economic any make to unwilling therefore a was as and alliance viewed hostile Germany which influence, of sphere French the in traditionally and These 1930’s. the of part most the for Germany withintegration economic resisted Romania Romania the in 2.3.2. economic sphere German despiteadvantage the dependence on Germany. adop Romania than resistant less but Bulgaria than reluctant more the was It and Yugoslavia. of Ustase breakup the for support Italian the against assistance system. diplomatic clearing offered the under goods industrial finished delivered Germany products mineral key to access 1999: oil other and soya rapeseed, which to need, wheat, not like did cropsGermany from away production agricultural shifting of possibility the “discuss to s order in Yugoslavia to experts agricultural of team a sent government Yugoslav the shaping in involvement the peasantry was impoverished. of percent 80 about as Yugoslavia in goods German for demand low to due exports Impo 1988). (Grenzebach, lard American for price the than expensive more kilos 100 per marks 7 was tariffs paying after lard Yugoslav of price The assets. blocked of amount considerable secure to order in quantities pri a not although which lard, and prunes e a lxbe oiy n mngd o s te laig ytm o t own its to system clearing the use to managed and policy flexible a ted The German commercial policy was based not only on trade but also on active on also but trade on only not based was policy commercial German The 436). “Over the next year Yugoslavia agreed to offer Germany exclusive exclusive Germany offer to agreed Yugoslavia year next the “Over 436). eain wr cniind y oai’ mmesi i te ite Entente, Little the in membership Romania’s by conditioned were relations vis - à - vis

rwn Gra eooi ifune I cud e ad ht it that said be could It influence. economic German growing ements and the corresponding trade contracts were signed signed were contracts trade corresponding the and ements

opr la zn ad axt” Ii.. n return In (Ibid.). bauxite” and zinc lead copper, 68 ority for Germany, were purchased in big in purchased were Germany, for ority

pl. led i 13 te German the 1933 in Already upply.

rts were not compensating for for compensating not were rts - ilig lns (Glenny, plants” yielding

t also It CEU eTD Collection 40% wheat in and products the case of (Ibid., 252). oil of case the in 10% of premium export an paid were exporters the possible was only exported be to were vegetables oil, and grain wood, policy, initial the to According these importers. with with them trade exchange to and right certificates the had banks authorized value; export the of percent issued certificates import received exporters 60 exceed not should imports exports” in complex (Ibid.wasof 249). a way percent That facilitated administrative and operation export previous a of basis the on eve 1934 “October/November of as well decreased tolater 7. high kept was rate interest The (Ibid.). agents economic instrument state a was legislation control exchange the and private was (NBR) Romania of Bank National the of capital the 244 2007: (S 1932 18, May on introduced control exchange of regime a to gold into gold convertible currency coins, foreign and gold bullions to convertible freely was leu the when 1932 and 1929 between priority Germany to lower of were which wheat, of exports its increase to need and sector agricultural the in engaged population the of percent 70 than more with and country agrarian curr hard for exchange in market free the on it sell to preferred government Romanian the while possible as oil much as buying in interested was Germany negotiations. long after 1935 March as late as h exch The Alongside the exchange control exports and imports began to be regulated as as regulated be to began imports and exports control exchange the Alongside - 254). The purpose was to prevent the devaluation of the leu. 90 percent ofpercent 90 leu. the of devaluation the prevent to was purpose The 254). ange rate policy of Romania went from a period of convertibility convertibility of period a from went Romania of policy rate ange

(Ranki, 1983:142 (Ranki,

onsu E Bea, . otce n A Iarovaci, A. and Costache B. Blejan, E. toanescu, ny Bt oai ws lo rdmnnl an predominantly also was Romania But ency. - 3).

ry import operation could be performed only only performed be could operation import ry 69

Central EuropeanUniversity,Budapest

by the customs authorities equal to 60 to equal authorities customs the by ietd gis piae ak and banks private against directed

for hard currencies. Where this currencies. Where hard for -

in 1932 it was 8 percent percent 8 was it 1932 in Vera Asenova –

CEU eTD Collection “economic or resources mineral its on based industrialization was period interwar and Dobrudja prioritynational The Kingdom. the Old in governmentcentralized a establishing South and Bessarabia Bukovina, Transylvania, borders its within adding goals national its fulfilled had Romania Great WWI of end the At industry. rathe but agriculture country’s the on not focused predominantly was elite political The reserves. petrol its of advantage unique the had it region, the German sphere inflthe of to belonging a signal to decided they Germany and Russia between pact the about knowing not and 1939 in Russia of power the of fear growing their was Germany of r the views ambassador’s the to According (Ibid.). Germans the by won currencies Allied the and mark the between battle the saw he this In Romania. with deal business every in to success Germany’s negotia Debreuil, French Lemaigre the Jacques to Bucharest, According in (Ibid.). ambassador Britain and France as such goods of buyers Romanian foreign other against discriminated also and Reichsbank the in assets than purchases before 1971). (Hoisington, leu gave per reichsmark. 44.74 advantageto cheaper Germanyof This 11 an percent reichsmark the to rate exchange the fixed Romania 1938, Einzig, from evident is as 1938 In (Ibid.). prices export agricultural the of recovery the to position Romania’s of development fixe was The depreciation of the leu immediately decreased the v the decreased immediately leu the of depreciation The it 1937 in until mark per leu 55 of rate exchange theofficial on based was Trade

lhuh oai ws rdmnnl a arra sae lk al onre in countries all like state, agrarian an predominantly was Romania Although te this level of exchange rate is a major victory for Germany against the Allies the against Germany for victory major a is rate exchange of level this te a a ee o 38 of level a at d eason why the Romanian government decides to allow stronger influence stronger allow to decides government Romanian the why eason

at a level of 39 leu per reichsmark but in 1939 fixed it at a lower level, level, lower a at it fixed 1939 in but reichsmark per leu 39 of level a at uence (Hoisington, uence 1971). - 39 (Ellis, 1940: 110). Ellis attributes this positive positive this attributes Ellis 110). 1940: (Ellis, 39 70

alue of the Romanian Romanian the of alue o is nascent its on r in the in CEU eTD Collection negotiated exports, agricultural on taxes and rates freight reduced autarky “industrial much policydiscontent. produced defla Their liberals. the by dominated regency was a which formed council, and throne the of a heir Mihai As son Act. infant Exclusion his made the he on response based life” matrimonial ”irregular his to due throne Janu 1926 In countries. their of relations through figures Royal Romania. political and economic the on influence strongexercised dictatorship of forms various in power for contenders only not were parties bu parties Liberal and Peasant National both by used was It seats. the remaining the half of of proportion a premium plus a seats parliamentary 40% than more wins which party every gives which law, of logic any following not economic efficiency. creation intended The small ofa war the in fighting for entitlement an as non land granting from (often expropriation 1921 of on reform based agrarian was The promoted, Party. Peasant National the to rise gave but WWI in Germany with allying to due support lost They position. leading the had which agriculture, to compliment a only as industrialization understood interests, policyforeign orientation. Francophile a had and 1974) (Rothschild, corruption” and favoritism of oligarchy “an was It Bratianu. Vintila brother, his domi by later and Bratianu Ionel of party liberal the by promoted was idea This 1951). (Roberts, alone” ourselves by emancipation nated by upper bureaucracy, the banks and corporation boards, which created created which boards, corporation and banks the bureaucracy, upper by nated An important role role important An pre the party, major other The vrsu h ws pone pie iitr n ac 3, 96 promoted 1926 30, March on minister prime appointed was who Averescu in Romanian struggles for power played the bonus electoral electoral bonus the played power for struggles Romanian in

- a Cnevtv pry representing party Conservative war t as most countries in that period, the political the period, that in countries most as t 71 r 4 ary

Central EuropeanUniversity,Budapest th

ig ao ws xldd rm the from excluded was Carol King - scale agriculture scale failed. inr ad anti and tionary - ethnic - oain) and Romanians) Vera Asenova - 3 hc it which 23 -

agrarian

landed

CEU eTD Collection of point the from assets valuable were Union Soviet the to proximity geographical c in and influence of sphere French the from away 1938 in turn decisive the behind reason main the was and Germany with relations their framed It development. economic Nationalby resourcesnatural in Peasant the (Ro1929 Party March in personnel. theand to capital lawforeign Later allow investment was foreign amended four restricting by passed resources natural the parliament nationalizing effectively mining the and exploitation July on 1924 In (Ibid.). 30,170) 1929 in (while people 500 18 employed they 1940 in and Ploiesti of area the in functionedrefineries Fifteen 2008). Sorin, in quoted 2003, (Agrigoroaiei, percent 0.57 Belgian English percent; o prices premium at oil sell could and world the in oil of producer largest “fifth the was Romania time the At companies. American and French British, from welcome were investments capital while ownership German of free remained Romania southern oil The Germany. and France Russia, between policy foreign balancing Bulgaria,wereunlike no armaments purchased Germany 1940.from until Romania of militarization The 1938. 24, February on constitution corporatist new a and dictatorship Royal his establishing to prior years king,eight himself proclaimed and returned Carol 1930 6, June On 1974). admin railroad brought loan, Italian an n the (Glenny,n open market” 2000:453). Capital in the oil refineries was distributed as follows: Romanian Romanian follows: as distributed was refineries oil the in Capital successful a pursued Titulescu minister foreign the 1936 and 1923 Between Economic nationalism played an important role in the Romania strategy for for strategy Romania the in role important an played nationalism Economic -

loser cooperation with the Reich. Romanian oil resources and their their and resources oil Romanian Reich. the with cooperation loser 6.44 percent; Italian Italian percent; 6.44 -

20.62 percent; Anglo percent; 20.62 -

3.47 percent; German German percent; 3.47 - srto udr i on oto” (Rothschild, control” own his under istration Dutch

started in 1934 with an open campaign but campaign open an with 1934 in started 72

16.2 percent; American American percent; 16.2 -

0.38 percent; other sources other percent; 0.38

laws on energy energy on laws berts, berts, 1951). –

10 percent 10

– ils in fields

26.16

CEU eTD Collection small state. a of case bilateral effects on thedomestic studyof economy the clearingsuitable trade for coun European other any than time longer a for that as well period 1913 the for percent 2.7 of rate growth economic rapid the documents century twentieth the in Bulgaria of Albania. after region the in country o is it 1932; in already Germany with agreement clearing bilateral a signed Bulgaria years; ten of period a for lev 32.5 of level high stable a at reichsmark the of rate exchange the kept it trade; total its b period the in country European East Germany on dependent most the as Bulgaria identifies literature secondary The Bulgaria the in 2.3.3. German the Black Danubian and in ports” Sea (Ellis,1940:110 z free of granting finally and processing oil and timber grain towards industry of of redirection the abandonment needs, German specific the of favor in production, monoculture oil the of percent 25 secured Germany documented As resources. mineral of imports Germany for strategic the with together output agricultural its of amounts big purchasing by Romania with deals beneficial mutually made Germany Yugoslavia, happ economy Romania the into penetration circumstances political the given But plans. war Hitler’s of view the most the

a growth rate of 7.2 percent between 1950 and 1973. However, Lampe notes Lampe However, 1973. and 1950 between percent 7.2 of rate growth a

rapidly growing export sector in Europe has been tied to a single buyer single a to tied been has Europe in sector export growing rapidly

ened slowly and gradually. Similarly to its strategy in in strategy its to Similarly gradually. and slowly ened –

1950 which i which 1950 economic ecause Germany had the biggest relative share of of share relative biggest the had Germany ecause ften cited as the most economically backward backward economically most the as cited ften Lampe’s 1986’s account of the economic history economic the of account 1986’s Lampe’s

73 y li, te ray f ac 2 13 … 1939 23 March of treaty “the Ellis, by s twice Europe’s average of 1.3 percent as as percent 1.3 of average twiceEurope’s s sphere

Central EuropeanUniversity,Budapest try. This is one of the reasons it is a is it reasons the of one is This try.

- 111). 111). ones for German transit goods transit German for ones

Vera Asenova

CEU eTD Collection 107). (Petrov,1933: paym belated for exceptions on decided it but import the after months three (usually available exchange foreign the make to had it which for period the specified and goods luxury importing for used be to exchange foreign allow not did it used; be not could exchange foreign import whose for items the specified bank The transactions. exchange foreign of agent onlycompetent the BNB the made and centralization its increased which Exchange, Foreign in Trade for Law the of was one important most The transactions. exchange February, Reserve Bulletin, pp.78). 1930, (Federal USD 1 = levs 140 and Franc Swiss 1 = levs 27 levelof the at sustained was mark open the on lev the of rate exchange the policy this of result a As 1929:101). (Vladikin, rate exchange daily the at BNB the from only purchase for available also was exchange foreign BNB; the by daily determined rate exchange availabilit an its at exporter for documentation the of acceptance the of days 10 within BNB the to sold be to was export through acquired exchange foreign the BNB; the at concentrated was exchange foreign in trade all that stipulated also it devaluation; contributing was which Exchange, Stock all Sofia suspended the regulation of operations The 1923. December 12 of exchange foreign in the trade of limitation and regulation the for 7840 N. Act the with currency the stabilize ov monopoly a established had BNB The Germany. from products industrial of deliveries for exchange in tobacco and wheat of export the facilitated agreement The Reichsbank. the and (BNB) Bank National Bulgarian cleari general a of signing the Bulgaria adopted an early policy of integration with the German economy with with economy German the with integration of policy early an adopted Bulgaria Between 1929 and 1933 BNB issued a number of directives regulating foreign foreign regulating directives of number a issued BNB 1933 and 1929 Between

g gemn i te pig f 92 ewe the between 1932 of spring the in agreement ng 74

er foreign exchange in order to order in exchange foreign er the October 1931 amendment 1931 October the o h currency the to purchased or or purchased t the to y ents) et CEU eTD Collection thestructure trade(Ibid.,to ofmanipulate 108). foreign also but economy the in money foreign of quantity the regulate to only not was policy Accordin another. of expense the at item one of more import to forbidden strictly was it and category item each for specified were imports of allowedquantities 107). The 1933: (Petrov, payments of rewarding was and crisis the of reality the to accordance in exchange foreign of needs their decreased had who businesses, prudent the punished actually effects randomizing and distorting period, longer a of mean the taking than Rather manner. formalistic very a in enterprises different among exchange foreign of quantities assigned had It policy. this adopting before formalistic a adopting for criticized app was bank national The 20). (Ibid., African colony” an were it if as country the manage [would] market…they a have [would] goods industrial European western the where production of forms economic lower of near all as well as country our allow to not countries industrialized western the of aim long clearing centuries the help “[would] bilateral it because dangerous as policy i.e. this saw 1932 Todorov, deals compensatory the under export mandatory on decided and exports and imports the of quality the regulated also it industries; local the to blow serious a was which 1931, in imports the of percent 50 to materials in decrease a included regulations Its 1932:19). (Todorov, economy national the of activeregulator an to Issue of Bank a itself from transformed had BNB oc ad o hvn cnutd n eooi ad oitl rus r experts or groups societal and economic any consulted having not and roach - eastern countries to develop their local industries and to keep them at them keep to and industries local their develop to countries eastern hs maue wr haiy rtczd y cnmss wo rud ht the that argued who economists, by criticized heavily were measures These

t hoe a ey hr pro fr bs o te loacs These allowances. the of base a for period short very a chooses it those, who had contributed to the worsening of the balance the of worsening the to contributed had who those, t te ae uhr hs hw ta te i o this of aim the that shows this author same the to g 75

Central EuropeanUniversity,Budapest

imports of raw of imports Vera Asenova

the level the (Ibid.). -

CEU eTD Collection 1932 in percent; 25 about wrote 1933 Petrov, Industry, and Commerce of Chamber Bourgas of secretary r additionally Bank National Bulgarian the by 27 percentwas decrease. almost this years four Within circulation. in money of decline continuous the shows 4 Table Source: Table (Petrov,1933).thepercent same At time money continued to circulation decrease. in goods import of prices than more by significantly cereals fell goods of export of prices Prices 1932). the (Nikolov, exports increase centralizing artificially to attempts and deficit payments falling of context the were local for intended use andpriorityexports was for given to agriculture. compensation the Bulgaria under industry Bulgarian the grew agreements for materials raw The of deals. trade import counter to similar goods, for goods of exchange simultaneous

As a percentage of total imports imports total of percentage a As The general clearing agreement with Germany was signed on June 24, 1932 in 1932 24, June on signed was Germany with agreement clearing general The deals compensatory the regulated also bank central The The high interest rate of 9.5 percent (decreased to 8 percent in May 1932) set set 1932) May in percent 8 to (decreased percent 9.5 of rate interest high The 4 Money. Depression. inBulgaria duringGreat Circulation the in

Petrov,1933. kept losing its competitive advantage (Ibid.). The products of local industry local of products The (Ibid.). advantage competitive its losing kept –

22.52 percent; and in 1933 1933 in and percent; 22.52 25

t h epne f xot o ray nutil od i which in goods industrial ready of exports of expense the at

xot rcs f eel eo te rdcin ot blne of balance cost, production the below cereal of prices export

for the period 1929 1929 period the for the imports imports the

–

of raw materials for the industry industry the for materials raw of 31.30 percent (Petrov, 1933). percent (Petrov, 31.30 76

estricted credit activity. As the general the As activity. credit estricted –

1 epciey ih 2 n 28 and 62 with respectively 31

were in 1931 1931 in were otat fr the for contracts

–

20.74 20.74

CEU eTD Collection bas payments, premium Different years. ten for unchanged parity its kept and respectiveinstitutions butimporters by of government the the two countries. by negotiated not were prices and (Kalinov, quantities The arrangements 1936:212). compensatory private for allow not did agreement trade parallel the and Germanywith agreements clearing the arrangements, compensatory private for allowed Switzer with trade Czechoslovakia and deals compensatory and Romania Poland, Turkey, Hungary, prohi explicit withoutthe permission theBNB of was issued. an 1933 In 2011:46). Ivanov, and (Tooze incomes grain a was latter The export). (Food “Hranoiznos” agency the and (EI) Institute Export established specially the exports agricultural prioritizing investment of policy the foreign of Part capital. of lack and formation capital local creating for taxation, conditions of unfavorable level high credit, expensive and limited very of context a in inve required the because 1932:111) (Kamenarov, time the of economist another to according Bulgaria to available not was sector agricultural the of productivity of level the Increasing 26). (Ibid., wellbeing economic and welfare a indeed is work their that peasants the of part the on realization a and creativity by replaced be it that argued and saving and economizing bac respects of culture local criticizesthe He export markets. securing policystatefor consolidated all “in were which and production, agricultural local industrial the modernize technologically and reorganize to need the ugrafxd h ecag rt fte e t te ecsak led i 1932 in already reichsmark the to lev the of rate exchange the fixed Bulgaria countries other with agreements trade the while that note to important is It - purchasing board established to stabilize agricultural agricultural stabilize to established board purchasing 77

Central EuropeanUniversity,Budapest ad a ecuiey ae o private on based exclusively was land

source of a better personal personal better a of source wr” h cle fr a for called he kward”; stment was not available not was stment over industrial ones was ones industrial over

private exporters and exporters private iin f import of bition Vera Asenova

ed on ed –

CEU eTD Collection autonom Relations are states International that assumes classical theory While system. international the in autonomy of o hierarchy wouldbe of study the for framework suitable A states. of dyad a between relations specific on rather based system, theinternational certaincharacteristics of of notbecause but chapte this of beginning the in adopted states, small of definition the From authority. on based one another frameworks explanatory alternative two with approached 2.4. 25 pay to required was its of Germanpercent in currency imports free (Ellis,1940:108). it Bulgaria 1938 in and market world the from Bulgaria prefe like looked this While cotton. and coffee like goods “colonial” called so the abroad, purchase to currency hard spent had itself Germany which for goods of Germany from delivery the for Bulgaria with st dependent most the as seen is Bulgaria no 1979). and (Koen, currency value convertible low in pay had would who that buyer War alternative World First the in Germany by used tanks old fo Reichsbank of goods,createdspecific whichsystemeffect in a of exchange multiple rates. import and export the for bank central the by granted were rate exchange this

The concept of hierarchy arises from the discussion of worldand thenature of thediscussion hierarchy order concept of The from arises be can outcomes their and states small and big between relations The

the at account mark frozen its using started government Bulgarian the 1936 In TheoreticalFramework r purchasing military equipment for its rearmament. These were mainly were rearmament.These its for equipment military purchasing r neis that on process ratherthanstructure.focused r, it follows that such relations are by definition hierarchical definition by are relations such that follows it r, ate by Ellis, 1940 who quotes the secret agreement secret the quotes who 1940 Ellis, by ate

78 rential treatment at first, it further isolated isolated further it first, at treatment rential u ad hrfr rltos ewe them between relations therefore and ous

–

one based on power or or power on based one

CEU eTD Collection rule” self of 26 1999:28). ba the on others state; with relations conducts dominant polity subordinate the to policy domestic of areas and policy foreign over authority polity “subordinate the empire informal an In 2009:53). “info in result hierarchies security and economic “dependency”. “economic exchange”, zone” and symmetrically “market Combined the defines he hierarchy economic high to low from and “protectorate” and influence” he hierarchy security high to low From hierarchy. economic and security of degrees several defines Lake David relations. economic and security between off trade a typically another, in benefits expected 62). (ibid, relationship” their is hierarchical more the regulate legitimately can ruler the that subordinate the actions of ofrange the greater “The 1999:32). (Lake, hierarchy” of degree the defines decision in shift the actor” “W 2009:51). (Lake, second a over authority possesses … actor one when “exists it but power power. unequal of than unequal rather of authority relationship a defines Hierarchy hierarchical. often are states among relations the powers, great among politics of exception the with fact, In horizontal. bet relations that follow not does it this from but government global no is there that sense the in anarchic still is system international hierarchy anarchic,

P olities are defined by Lake as “ as Lake by defined are olities States can give up some some up give can States hs hf o decision of shift This

(Lake, 1999:18) (Lake,

- making authority from the subordinate to t to subordinate the from authority making he based approaches assume that authority is divisible. The The divisible. is authority that assume approaches based ther entered into voluntarily or through the pain of battle, it is it battle, of pain the through or voluntarily into entered ther

- aig uhrt cn e bevtoal euvln to equivalent observationally be can authority making any organized political community that has or cou or has that community political organized any authority over a certain policy area in exchange for for exchange in area policy certain a over authority distinguishes between “diplomacy”, “sphere of “sphere “diplomacy”, between distinguishes 79

irrh i not is Hierarchy

Central EuropeanUniversity,Budapest rmal empires” and “empires”. (Lake, “empires”. and empires” rmal ween a dyad of states are always always are states of dyad a ween 26

sis of sovereignty” (Lake, sovereignty” of sis

eesrl gone in grounded necessarily ee decision cedes he dominant polity that that polity dominant he ld have a history history a have ld Vera Asenova - making

CEU eTD Collection authori and Coercion 2009:21). (Lake, exercised” is power which through mechanism the but compliance state’s] [small result the not is power of forms other from authority distinguishes “What relations. interna and conditions, economic and policies state both as understood structure, domestic the between relationship through sustained practice and byruler ruled” a (Lake,1999: 20). a created construct political a is “Authority factor. explanatory an as power from separate and relevant therefore is practice through sustained Reputation practice. its of part important an was partners trading its to signal right the Sending cooperation. power economic from restrained of position its abused it Had reputation. of reasons for Europe Eastern of voluntarily exploitation Germany 1930’s the In law. international restrained is hegemon the of power The states. weaker to extended are rights voting where institutions, international through restrained is power hegemonic l a at compliance post the In violence. of threat secure the through it securing to opposed to order in power own its limits It state. power. effect deterministic rather not and authority on based is which concept, relational a is contrary the on Hierarchy or permanent a has and system international the in place its of result a is It labor. of division international the in place disadvantageous its and position power weaker its of function a is state subordinate economic of level the theory dependency to According ways. different in at arrived although state core a and peripheral a between dependence ht eaae atoiy rm orin s h self the is coercion from authority separates What s icse b Dvd ae 19; 09 Coe ad put 20) the (2009) Spruyt and Cooley 2009) (1999; Lake David by discussed As

vis - à - vis

n prnr tt, t ol hv dsorgd te partners’ other discouraged have would it state, partner one tional superstructure, is an outcome of hierarchical of outcome an is superstructure, tional y a be can ty 80

observationally equivalent i.e. they i.e. equivalent observationally - etan o te dominant the of restraint - war liberal order US US order liberal war eeomn o the of development

n development. on ower cost as as cost ower

by means of means by nd -

CEU eTD Collection what its participatingare it. motivations for in and state subordinate the to attractive hierarchy makes what authority, constitutes what study case detailed a through demonstrate to important is it approach hierarchy the in state small the of position structural the from inferred be cannot and interactions of process the tracing by revealed be only can authority non of consequence negative legitimate a accept choice ruled beto availablethe should of option the First, conditions. two least at with comply to has necessarily otherwiseissues reserved of number increasing an over ruler the of authority the by defined variable “a is It 25). (ibid, order” political for prerequisite “a it is nor states, between relations formal the withthe between relationship legalistic concerned not is he state “subordinate” and “dominant” and “ruled” and non their punish or discipline to whether chose individuals relationship authority an “In choice. for allows it that is coercion, 2009:20). (Lake, rights the margin the at contest ruler and ruled expected on based were the both as struggle “political a review of context the in gains marginal political under or economic case the in relations hierarchical that their than rather mechanism their studying and states the between interactions the of study case rigorous a undertaking by is problem this resolve to way A produce. they outcome the by differentiated be cannot nte iprat etr o pltcl uhrt, hc dsigihs t from it distinguishes which authority, political of feature important Another This set of definitions assumes that a case of hierarchy in international relationsinternational in hierarchy of case a that assumes definitions of set This

to comply with the ruler the with comply to

to theruled” (ibid, to 45). whether ’s commands, but are bound by the right of the ruler the of right the by bound are but commands, ’s - opine (bd 1) hl Lk rfr t “ruler” to refers Lake While 18). (ibid, compliance” two categories. Hierarchy is neither defined by the by defined neither is Hierarchy categories. two

to comply with d complyto the 81

Central EuropeanUniversity,Budapest results. What this thesis aims to show is is show to aims thesis this What results.

and duties […] of their relationship” their of […] duties and

- compliance. Second, the source of source the Second, compliance. international system. In a In system. international emands of the ruler or to to or theruler emands of Vera Asenova

CEU eTD Collection thepersis explains scholarship, regimetheory broader the well critique, as as His weakened. is hegemony after cooperation of decline a predicts which theory, stability hegemonic against argued He power. US of weakening relative the after lib continuityof the enquiryinto 1984 Keohane’s to analytically similar of compliance withpolitical subsidiesto economic the sixdemocracies. people’s countries the to concessions have to found also is Union Soviet The Europe. Southeastern economic certain granting and exploitation self of acts similar committed internati sustain to] order [in hands will“dominant while theisthat itself” US bind states theirto take had Lake’s tie others bind “to order in that claim theories Regime regimes. the supplies which state, the of legitimacy the or authority of source dependence measured trade with total as the of the ruled 68,71). ruler/GDP (ibid, are hierarchy economic of Indicators 68). (ibid, state subordinate the by possessed alliances of number independent the 2) and state subordinate the of territory the on their state dominant estimates the and hierarchy economic and security Indicato correlation. for indicators of set a provides Lake 76). (ibid, partners” trading and alliances their diversify to efforts make that signaling indirectly are “states Nevertheless, available. was choice policy alternative an that directly observe to difficult is it evidence counterfactual of absence the In obvious. The hierarchy framework has certain similarities with regime theory, namely the namely theory, regime with similarities certain has framework hierarchy The ca the In The question of continuity of bilateral clearing regime in Southeastern Europe is Europe Southeastern in clearing regime bilateral of continuity of question The hy eonz te uhrt o te oiat tt we te fi to fail they when state dominant the of authority the recognize they se of a less powerful state the possibility of choice is not always always not is choice of possibility the state powerful less a of se rs of security hierarchy are 1) the presence of military forces from from forces military of presence the 1) are hierarchy security of rs

1) monetary policy authority and 2) relative trade trade relative 2) and authority policy monetary 1) - etan b frgig potnt fr economic for opportunity foregoing by restraint nl uhrt” ii, 3) Gray also Germany 131). (ibid, authority” onal the regime depends on the limited power of power limited the on depends regime the 82

purchased loyalty and and loyalty purchased eral world order worldorder eral tence oftence

CEU eTD Collection hegemonic order or an informal empire. Scaling down the scope of the theory increases its its increases theory the of scope the down Scaling empire. informal an power. explanatory or order hegemonic global 27 pol international inter the cooperation, of end the predicts theory stability Hegemonic hegemon. the of decline associate self dominant a that assumption the share theory stability hegemonic and theory regime sense, theand terms “Nazi” to “Soviet Regimes” to and thepolitical refer regimes. payments, bilateral and trade balanced of principles common the to refer to regime” clearing “bilateral term the use I simplicity, of sake the For changing. are regime) ( norms the while next, the to regime one from principles of continuity the is therefore, studies, thesis the What regime. of definition the fitting for suited ill case this makes Regimes, Soviet the and Nazi betwe continuity normative of absence The unaltered. remained states friendly with trade international of rules and principles the while regimes, Soviet the to Nazi the from changed p drastically values or it norms The values. and because norms on emphasis regimes ideological different across regime trade of thanrather simply power beh the is that converge” expectations on emphasis the is approach this of value The internationalregime. an of persistence actors’ which around procedures making decision and rules norms, “principles, of persistence the with order global liberal

These theories These vo rte ta dsrbto o cpblte ad hrd om ad institutions and norms shared and capabilities of distribution than rather avior Regime theory is not a suitable theoretical framework for studying the continuity the studying for framework theoretical suitable a not is theory Regime rs Ha eie rgms s eutn rm pretos f neet. n this In interest“. of “perceptions from resulting as regimes defines Haas Ernst absolute hegemon, nev hegemon, absolute - d with its functioning (Haas 1982). They differ in their expectations after the after expectations their in differ They 1982). (Haas functioning its with d a pro big n eape f n atr eeoy stain in situation hegemony” “after an of example one being period war - interested state provides or imposes a regime while bearing the costs the bearing while regime a imposes or provides state interested emerged in order in emerged itical economy literature. The disintegration of the world market after market world the of disintegration The literature. economy itical

27 ertheless, their assumptions are not incompatible with cases of regional of cases with incompatible not are assumptions their ertheless, .

to explain global global explain to i.e. 83

the broader ideological justificatio ideological broader the

Central EuropeanUniversity,Budapest rather than regional regional than rather re and order Vera Asenova t a strong a uts

they

ns for the for ns

assume a assume en the en -

CEU eTD Collection differenc post the despite that claims and the regimes international Communist and Communist the compares Janos 2001:223). (Ibid, legitimacy” and organization purpose, to respect with vary ones “international although hierarchical and domestic regimes, All force. of use the exclude not does sub of relationship hierarchical a implies “regime” term The 2001:222). (Janos, another” to regime international one from but democracy transition of process “a states as European East small post the discusses Janos Andrew Europe. Eastern and the carry itself in not bilater does it but regimes political dominated the and dominant the between convergence institutional facilitates bank central The bank. central the no do I channel a dependence policy international for change, and agent of themain as state small the in bank central the of role the on focus I Although procedures. and rules to subject also are discont institutions formal the researching am I case the In general. in bureaucracies and organizations international institutions, formal understood is emerge institutions how of Regardless cooperation. facilitate autonomously can they created meansis by guaranteed. no necessary funct the through possible is hegemony global that is cooperation that predicts hand, other the on confirmation theory, Regime 1973). (Kindleberger, a is Depression Great the e isiuinls epan cniut b agig ht ne ntttos are institutions once that arguing by continuity explains institutionalism New The concept of hierarchy is used in the context of Europeanization of Central Central of Europeanization of context the in used is hierarchy of concept The al regimeal to theforward post t explain the continuity of the regime with the specific bureaucratic practices of practices bureaucratic specific the withregime the continuity of the explain t inuity, while the process of cooperation is continually facilitated by the same the by facilitated continually is cooperation of process the while inuity,

as a result of rational choice or in a path a in or choice rational of result a as ioning of an embedded international regime, although this although regime, international embedded an of ioning

- war period. 84

- dependent way, by “institutions” it “institutions” by way, dependent … not from authoritarianism toauthoritarianism from … not -

- and super ordination” which ordination” super and Communist transition of the of transition Communist

international alike, are alike, international es in purpose, in es - CEU eTD Collection richer a on builds and institutes research and association business fairs, trade between sub level of the at analysisis His theregion. in influence political ties information order and in Germany business and Europe educational, Southeastern of network a extend to used been has culture German of reputation high the that argues and period interwar worked has 2010 the Gross, on Europe. specifically Eastern in continuities institutional various institutionsthe same as states the hegemonic state. i That uniformity”. “institutional on based region the on change political domestic imposing of method common a sharing as Union Soviet the and (EU) Union European the sees Janos 236). (ibid, commonwealth” exis the into Europe Central East “co to order in gains political expected and restrictions economic between off trade the on relying hegemony, “soft” as seen is argument Lake’s with ofthe narrow Communist party interest bureaucracy. the by seen as regime servedand economy centralized a legitimated they if or wholea as polity subordinate international the legitimated outcomes these if though pre of level “the i It 228). (ibid, culture” political the of nature the and development economic were institutions domestic of imposition external of outcome the determined relationship. What the for factor legitimizing a as authority do Janos power with hierarchy equating While (Ibid.) outcomes” political domestic [influence] thus and region the of states the and for agendas political setting enforcing in power external of role “the share they legitimacy and organization In the case of post of case the In ocps f ot oe ad euain ae en mlyd n explaining in employed been have reputation and power soft of Concepts eain bten emn ad otesen uoe n the in Europe Southeastern and Germany between relations - Comm unist transition Western hegemony, much more in line line in more hegemony,much transition unist Western ting institutional framework of the larger liberal liberal larger the of framework institutional ting 85

Central EuropeanUniversity,Budapest o nrae emn cnmc and economic German increase to truh rmtn i te client the in promoting through s

- state actors such as such as state actors - opt the societies of societies the opt Vera Asenova - Communist es not see not es s unclear s

CEU eTD Collection but economic position with aspirations. goalsand own their political w states, small of agency the for argument an is This hegemons. different across even regime the of operation continued the enables which interests, domestic of agent an and domestic to foreign prioritizes source which tradition, political a foreign fosters legitimizing and of authority, culture political a creates requirements and rules foreign bene extractto position a in conditions certain under are and them in participate to motives positive have states small rules, preferred their with compliance induce to reputation (Kirshner, states 1995). friendly politically with relations in effective especially is institutions monetary the of analysis Kirshner Jonathan the by power Similarly, monetary coercion. than cost lower a at subordination it achieves how and authority of concept Lake’s of illustrations important are power soft of i rule its legitimize to order in goal(Gross, this 2010). reaching for tool effective an was power soft of use the and economy global the of collapse government’s German E South with bloc economic an the building for ambitions imperial with line in was effort This elites. business Balkan to attractive and credible partners trade German making for organizations cultural and of role the encompasses which authority, of concept fits and balance trade offs. It also demonstrates that continued subordination to subordination continued that demonstrates also It offs. trade balance and fits h tei dmntae ta wie i sae ue sf pwr n political and power soft used states big while that demonstrates thesis The policy cultural used also Union Soviet the that evidence of shortage no is There The thesis thus uses the case of Bulgaria under the German clearing regime regime clearing German the under Bulgaria of case the uses thus thesis The s of political change. The small state is simultaneously a client of the big state state big the of client a simultaneously is state small The change. political of s ih xlis hi psto nt ih h dtriim f hi subordinate their of determinism the with not position their explains hich

n the region (Janos, 2001). These detailed case studies case detailed These 2001). (Janos, region the n

finds that the concealed power embodied in embodied power concealed the that finds 86

private economic, educational economic, private astern Europe after the after Europe astern

CEU eTD Collection countries. Table socialism (vanperiod of Brabant,1990, cited Hillman in and Milanovic, 1992). Cou the of members the with clearingtrade the and 1939) (Christophoroff, War Second World share80 was total percent clearing in the trade before Bulgaria about For the of trade degree international economic exchange withSoviet the bloc. well a of provision the was East the to expansion o consequences unintended the Bulgaria of case the In hegemon. the by controlled trade of share relative highest the had Bulgaria that means this trade international of system clearing a Under countries. European highest is state, small the of trade totalthe in state that with trade of share the by approximated as state hegemonic the on dependence of degree The case. likely least a on hypothesis this demonstrate to Sovietinternati the under then and h cutis n h rgo ue te iaea cern rgm t a different a to regime clearing bilateral the used region the in countries The

5 and these degrees remained relatively stable in the pre the in stable relatively remained degrees these and . Shares ofCMEAShares . totaltrade in of trade USSR and trade cl o Mta Eooi Assac ws ogl 8 pret o te entire the for percent 80 roughly was Assistance Economic Mutual for ncil Shares of the CMEA in Trade of Member Countries; Shares of USSR in trade of of trade in USSR of Shares Countries; Member of Trade in the CMEA of Shares

member countrues, 1989 1989 countrues, member onal trade regime, embodied in the CMEA in order in CMEA the in embodied trade regime, onal in the case of Bulgaria among all Southeast Southeast all among Bulgaria of case the in 87

Central EuropeanUniversity,Budapest (percent) - functioning institutional design for for design institutional functioning te ai ln o economic for plan Nazi the f

and post and socialist socialist Vera Asenova - war period. period. war

CEU eTD Collection authority. policy a detail in analyze to order in concepts theoretical withnarrative historical combines a It time. of periods different regime. and trade international b the of continuity the for sufficient institution the of was payments monopoly state that demonstrate chapters following the productionweremeans economyof The and privatelywas owned. capitalist still a not 1930’s late the in present alreadywas socialism that imply does regime clearing bilateral the of continuity The control. centralized more and regulation state more produced turn in which economy, of type corporatist state admini of regime a rather but socialism itself in not the was that control This true economy. the also over control unprecedented is gained state it Bulgarian demands, German the with accordance in transformed demand German under that true is it While imposition. German of outcome inevitable the nor factors, structural Publications. SocialismEurope. Eastern in Source: The thesis argues that this dependence was neither a mechanistic result of of result mechanistic a neither was dependence this that argues thesis The

Romania Poland Hungary GDR Czechoslovakia Bulgaria

Hillman, and Arye Branko Milanovic, L., 1992: eds. 221. The method used is detailed process tracing within a single case over two over case single a within tracing process detailed is used method The

Import CMEA in Total in CMEA Domestic Restructuring Domesticand ForeignTrade Restructuring 42 54 83 40 35 32

Bulgarian institutions adjusted and rules were were rules and adjusted institutions Bulgarian Export - aig rcs ad mcaim f granting of mechanism a and process making 55 32 32 38 55 73

Import

USSR in CMEA in USSR 58 60 62 57 57 79

Export taiey aae eooy a economy, managed stratively 59 56 56 58 54 74

. The economy in the 1930 the economyin The . Import USSR in Total in USSR ilateral clearing trade clearing ilateral The from Transition 23 21 22 22 31 66

Export . World . Bank World 32 18 24 24 30 54

CEU eTD Collection dependencetrade of degree greatest the allowing it on based chapters following the for study case a chapter as Bulgaria defined the Finally value. equal relatively of are which respectively Union Soviet the and Germany of shares the of and countries European Southeast the of trade percentage as trade clearing bilateral of shares the of stability relative the as regime trade the to of continuity the resistance defined It Germany. with and integration economic cooperation for motivations countries’ individual of examples Eu Eastern in sphere economic German the of role the on debates o up giving willing a as but power as simply not hierarchy understanding 2009 Lake, and 1999 Lake, theoretical main the and concepts key introduced states; faces state small a trade economic and political the as thesis the of scope the defined chapter The Conclusion

f authority over some policy to a greater power. It reviewed It power. greater a to policy some overauthority f in heacia rltosi wt a i sae I dfnd small defined It state. big a with relationship hierarchical a on Germany and the Soviet Union respectively. Union Soviet the and Germany on 89

Central EuropeanUniversity,Budapest

prah wih follows which approach, oe n gave and rope Vera Asenova

existing f total of - offs

CEU eTD Collection of rules German changing constantly of pressure the under development institutional uses chapter This main the allocator became state Bulgarian the which of result a as government Bulgarian control. state of Bulgarianon domestic inst short the and decisions government’s Bulgarian the behind interests and motivations the traces it occurred; dependency such how of explanation historical a to system clearing the on dependent be to continued and market German the on dependence of level high a developed Bulgaria period this During Bulgaria. in trade and international over control state Increased Germany. central by imposed rules trade international implementing for responsible was BNB The relations. monetary international channeling in (BNB) Bank National Bulgarian stud historical a through analyzed be will Bulgaria in regime trade agreementsbetween thetwochanges trade deep themonetary countries. The of and clearing bilateral of establishment subsequent the and Depression Great the during exchange controls introductionof the analyseschapter This Chapter Chapter

Bulgaria experienced both external loss of authority and internal strengthening internal and authority of loss external both experienced Bulgaria zd eiin aig n emn fre te rda sra o sae control state of spread gradual the forced Germany in making decision ized of resources and the main negotiator of international economic exchange. economic international of negotiator main the and resources of 3 : Bulgarian :

h principal The archival documents from the Bulgarian National Bank, which trace which Bank, National Bulgarian the from documents archival

iia dge i te ota pro. hs hpe rvds a provides chapter This period. postwar the in degree similar of Domestic Institutions Institutions of Domestic itutions. - German Relations Relations German - gn rltosi bten h Gra ad the and German the between relationship agent

d hoc ad

dutet t te changing the to adjustments –

in Germany and BulgariaGermanyin and Sources Foreign y of the role of the of role the of y - term effects term CEU eTD Collection 29 Krystev, 1932. in data debt and foreign 28 was Augus balance trade still positive through the prices export drop in the Despite revenue. exports of decrease percent 4.6 a to led exports of volume the of 1930 in tons 000 318 to 138 from increased exports of quantity the while levs, million 3340 deliveries. and purchases German on dependent heavily become to it allowing while economy s to efforts made (BNB) Bank National Bulgarian the accounts for only used be could which government bank, central German the at accounts blocked wer that export meant from this revenues Bulgarian clearing bilateral Under 1944. until period entire the for balance trade positive predominantly a with Germany with conducted was Bulgaria of trade nat the of percent fifty around to payment up of obligations with of country debtor a was balance Bulgaria addition In a problem. created revenues currency foreign Declining currency. o fall a and an suffered Bulgaria 1932 and 1929 Between 3.1. well sources on thetopic. secondary as Other sou trade.

The numbers are for the first seven months of both years 1929 and 1930. 1930. and years 1929 both of months seven the first arefor numbers The Author’s calculations based on national income data by Chakalov, 1946 c 1946 Chakalov, by data income national on based calculations Author’s

rm 99 o 90 h vle f xot dcesd rm 50 ilo lv to levs million 3500 from decreased exports of value the 1930 to 1929 From TheGreat Depression in Bulgaria andGermany

- pie o arclua exports, agricultural of prices f prvd counter approved rces include published academic journals of the period1929 the of journals academic include published rces

oa icm i 1932. in income ional 29

(BNB 2004:193). That means that a 145 percent increase percent 145 a that means That 2004:193). (BNB

- ucae i Gray I mngn tee frozen these managing In Germany. in purchases

nt ad n ovril crec bt et in kept but currency convertible in paid not e

Central EuropeanUniversity,Budapest

hc wr is an ore f foreign of source main its were which 28

ewe 6 ad 0 ecn o total of percent 80 and 60 Between ufo o short of outflow

timulate the domestic the timulate - ited in Rangelova, 2000 2000 Rangelova, in ited em oeg capital foreign term

000 tons in 1929 in tons 000 Vera Asenova t 1931, but 1931, t - 1944 as1944 s

CEU eTD Collection the trade and opened cleawaybilateral the to international restricted further which control, exchange introduced Bulgaria currency, dollars. US i levs million 870 was reserves currency foreign of to theUS israte levs dollar 143 1929 1930. and both in Public Central the Source: Table gold coverage. declining its in expressed gold, against lev the of a depreciation caused considerable which Depression, Great the of time the at reserves exchange foreign fo the depleted levs million 500 2 to up capital foreign term short of withdrawal massive time same the At 1986). Export (Lampe 1933 and 1929 deteriorate. between half by to reduced earnings started balance trade the onwards 1931 September from reign exchange of the BNB (Avramov BNB the of exchange reign Even though gold and silver reserves were relatively stable, the rapid depletion rapid the stable, relatively were reserves silver and gold though Even Increase(+) or decrease ( 1930 31 30 1929

6 February28 January31 December November October31

. Foreign ReservesForeign . 10.1929 ofBulgaria,

Avramov ed. 2004. 2004. Avramov ed.

n 91 i odrt aod eauto o is eety tblzd national stabilized recently its of devaluation avoid to order in 1931, In

Records Office, Vol. 4, 1930 4, Vol. Office, Records

Gold andSilver

The BulgarianDocuments Bank: National CollectionA of 1570 1566 1558 1555 1552 - ) Feb. ) 28, 1930compared to Oct.31, 1929 +18 (millionlevs*)

Foreignexchange

1999). Table 6 shows the rapid decrease of decrease rapid the shows 6 Table 1999). 92

ring agreement withring agreement Germany. - 1222 1947, p. 189. * The annual exchange annual The * 189. p. 1947, - 352 506 911 846 870 n five months or about 6.09 million 6.09 about or months five n -

02.1930.

% Coverage

38.16 42.70 42.55 40.22 39.74 4

- .39

, CEU eTD Collection be would control state where system political new a to transition possible a ushering as crisis the foresaw Tsankov lasting.” and deep “ubiquitous, as crisis the described Ale 1931 national the to blow aserious and sentiment signcrisis. of huge a was Empire Ottoman the of granary the been once imp to cheaper much still was it as effect, negligible a had tariffs These products. agricultural for tariffs import of introduction the was scissors price widening the to response protectionist One high and marketization of degree urban low profitability, the and productivity low of agriculture, scale power small population, purchasing low overpopulation, agrarian by characterized Nenovsky N. Pavanelli,Dimitrova,K., G. and 2007:19. Source Table h cii agaae te ogtnig nedvlpet f h economy the of underdevelopment longstanding the aggravated crisis The In an emblematic speech at the Bulgarian Economic Society on December 3 December on Society Economic Bulgarian the at speech emblematic an In 1939 1938 1937 1936 1935 1934 1933 1932 1931 1930 1929 1928 1927 7 Year Saitcl erok o te igo o Blai (94 13, 91 in 1941) 1937, (1934, Bulgaria of Kingdom the of Yearbooks Statistical : . Foreign reserves,Foreign . gold adr sno, n cnms ad fre pie iitr f Bulgaria, of minister prime former a and economist an Tsankov, xander

(in millionlevs) Totalreserves

11677 12897 13078 netdes f h paat ouain Dsao, 2005). (Daskalov, population peasant the of indebtedness 8250 8196 7158 6549 7278 7442 7519 8620 9249 8984 ort American wheat. The importation of wheat in what had what in wheat of importation The wheat. American ort

(in percentages) Coverage ratio

cover

age 93

Central EuropeanUniversity,Budapest

ratio and trade balance,ratio trade and 1927 29.9 31.8 31.9 33.8 34.4 35.3 35.8 36.6 42.2 31.2 28.3

36 37

(in millionlevs) Tradebalance

- 1274 1601 1928 - 868 644 729 244 287 644 489 810 - 34 88

Vera Asenova -

1939. 1939.

CEU eTD Collection a institutions domestic on influences change institutional external it because the argument slope on slippery the focuses from differs contribution This agreements. clearing bilateral eventua and 30 initially The Plan”. “New the as 1934 September in of policy changes trade the and announced monetary officially Schacht Hjalmar Economy and the Reichsbank of the Minister of governor The (Ibid.). other foreigners and with trade relations to economic inevitably extended control and higher evasion for penalties four Nazi the of implementation 20 above sums to applied restrictions and severe too not were penalties where regime liberal exchange conor three policydevaluationAmong the alternatives: of the mark, foreignmoratorium debt 1987). (Kindleberger, America Latin in announced were moratoria debt of number common a was flight Capital con problem, rate. exchange mark’s the of defense of policy a regime i first the as seen is which activity, monetary and economic foreign over monopoly assumed state the currency national the of value the protect to order In crisis. the of outcome a or newsystemfascist kind ofcapitalist he stated: Ami rule. the

Hayek’s idea of the “slippery slope”, initial slope”, “slippery the of idea Hayek’s also was 1931 August 1 on control exchange of adoption initial the Germany In main the was state the of involvement stronger a that agreed (1932) Cholakov influenceand control over all spheres oflife (Tsankov, 1932). n t iiil hs Gra ecag cnrl a se a a comparatively a as seen was control exchange German phase initial its In 30 . nstitutional change of socialist type adopted well in advance of the socialist the of advance in well adopted type socialist of change nstitutional

000 reichsmarks only (Child, 1958). However, in 1933 1933 in However, 1958). (Child, only reichsmarks 000 lly to a socialist type of state, finds empirical support in the case of exchange control and and control exchange of case the in support empirical finds state, of type socialist a to lly y okn a lf nwdy w cn e ta te tt i icesn its increasing is state the that see can we nowadays life at looking By current with the increasing unavailability of international lending after a a after lending international of unavailability increasing the with current s te netit wehr h nw ytm ol b Communist, be would system new the whether uncertainty the dst

(Hayek, 1944) (Hayek, trol Germanytrol the latter. opted for

- er ln ecag cnrl bcm stricter, became controls exchange plan, year

regulation leading regulation 94

incrementally nd trade as a specific channel of of channel specific a as trade nd

to greater state control control state greater to and 1934, with the with 1934, and CEU eTD Collection F 285 Office, Sofia. K/5/80). Records Public (Central Berlin in Reichsbank the of rate exchange average the to the month the of day last the in should not if balance, becorresponding clearing com accounts, on that stating clause clearing a had The 1932 exchange. of foreign agreement no but banks central the between notifications between cros reichsmarks What exporters. in and importers cleared German be to were Payments account. same the from paid were Bulgaria to Exports Reichsbank. the at account Bulgarian the to importers Bank National Bulgarian the for account reichsmark a opened respectively Reichsbank the and Reichsbank the name of the in levsin an account opened National Bank the Bulgarian agreement cleari Bulgaria 2002). German The (Ritschl, 1931. October 15 creditors on control exchange principal introduced its from away diversion trade and autarky expansion, credit domestic towards path the took Berlin which with decision Germ in introduced was control Exchange Germany1931 government. active German an into transformed mobilizing regime wasregulatory mechanism stabilization currency defensive 3.2. g n tae gemn ws ind n 4 ue 92 Acrig o this to According 1932. June 24 on signed was agreement trade and ng

salsig iaea Tae eain Bulgaria Relations Trade Bilateral Establishing - 1932

in Berlin. Imports from Bulgaria were paid for by German German by for paid were Bulgaria from Imports Berlin. in

eore a hm ad bod o te ed o the of needs the for abroad and home at resources 95

Central EuropeanUniversity,Budapest n o 1 uut 91 Cid 195 (Child, 1931 August 1 on any e ntoa bres ee od and goods were borders national sed pensated pensated according - ugra bilateral Bulgarian Vera Asenova ) a 8), -

CEU eTD Collection spread control from to themonetaryof spheres economic other sector activi BNB the introduction its after Soon measure. crisis anti an as implementation initial its in least at Germany in one the to similar very transactions exchange foreign over of monopoly unprecedented an was This 1999). (Avramov ones available permissionnot could of the bank and the purchase the spending newbefore amounts with it use only could currency foreign held who individuals bank; the to commissions Local art. of works surrenderthe to obligedwere companies offoreign or representatives goods luxury of import the for allowed not was exchange foreign prohibited, was lev Bulgarian of Export controls. exchange imposing country t in operations stop to right the acquired bank the 1931 October 17 of regulation new a With policy. economic foreign of tool active an than was mechanism stabilization transformed i currency defensive initially the Thus Plan”. “New and the as monetary Schacht by 1934 of September in announced reorientation officially was policy This commercial (Ibid). foreigners with an relations trade to economic inevitably extended control and higher evasion for penalties four Nazi the of implementation 20 above sums to applied were penalties where regime, liberal comparatively a and mark the of defense the for institution an as Germany in control exchange initial the describes Child 1978). (Child, seller” exchange foreign exclusive the be to and buy to entitled was It transactions. exchange foreign Exchange control in Bulgariain control Exchange all of Reichsbank the of monopoly “a meant Germany in control Exchange nto an active regulatory regime.

0 rihmrs ny I 13 ad 94 wt the with 1934, and 1933 In only. reichsmarks 000

- initially was a reaction to external pressures rather pressures external to reaction a was initially er ln ecag cnrl bcm stricter, became controls exchange plan, year 96

all receipts of foreign exchange foreign of receipts all

not as severe and restrictions and severe as not e oeg crec o any of currency foreign he ir foreign currency ir foreign ty. ty.

h BNB the other d

CEU eTD Collection allowed. notwas 31 is which into the socialistthecontinuity clearing system. of institutions sphere, domestic the B the of role on the in change the by effects demonstrated lasting had level international the at changes These bargain. political of domain the to exchange economic of domain distributed being are resources non the from arises Bilateralism assets. these of allocation the over leverage more bank givingthat bank country blocked a more the more exported, The exchange. foreign of form the in trade from gains expected employment, tradesurplusgrowth clearing under and deliver not does the system the Th licenses. import and export through use their regulated which bank central local the by controlled and frozen were exporters foreign of assets Second, state. the on dependency produced t of character bilateral The cost. opportunity or price demand, of factors despite country partner same the to directed were exports and imports purposes, payment for First, regime. of sphere the precisely is It 1932. international exchange enforcedover that control private domestic economy. the as early as nationalized were operations propert exchange account. of unit a only and remained exchange of medium a as function its lost money sphere international the In

Its role as a storage of value is also questionable because private accumulation of foreign assets assets foreign of accumulation private because questionable also is value of storage a as role Its diinly he srcua cags f h eooy cu wt ti trade this with occur economy the of changes structural three Additionally money. of role the in change fundamental a meant control exchange all Above e rd rltosi md i ssetbe o oiia pesrs and pressures political to susceptible it made relationship trade he

y remained private and transactions relatively free, all international all free, relatively transactions and private remained y ird, while exports are desirable from the point of view of economic of view of point the from desirable are exports while ird,

- convertibility of assets and is the point at which economic economic which at point the is and assets of convertibility

assets it accumulated at the partner country’s clearing clearing country’s partner the at accumulated it assets ahr hn rdd te on o tase fo the from transfer of point the traded, than rather 31

hl te oan o pouto ad domestic and production of domains the While 97

Central EuropeanUniversity,Budapest NB in the 1930s and the functional the and 1930s the in NB

Vera Asenova

CEU eTD Collection economy the of control state increased and centralization greater towards change a explains:Directorate 442 p. K/5/164 285 F Sofia, Office, Records Public (Central counterparts trading its on rule this imposed and companies of prohibition Reichsbank 1933 the is example One regulation. directly trade German in is changes by centralization influenced trade foreign in takes bank the role the But depression. seen be can exchange foreign over monopoly bank’s central Bulgarian The one. complex a is policymaking banksserved transactioncentral merelyas facilitators. of stage initial the in practice common a was This country. partner the in accounts blocked own their manage to allowed are merchants if basis private on operate can it and state the by centralized be to need not does pr predominantly was Switzerland with clearing 1934, by centralized completely was Germany with trade While time. across and countries different with existed centralization of degree Different control. exchange to functions its extended soon centralizati This itself. trade controlling BNB the trade, of means the of control in Once h rltosi bten emn neet ad ugra domestic Bulgarian and interests German between relationship The 3.3. This is an illustration of ho of illustration an is This official the through channeled be to All on sum. the now clearing accounts (Ibid). with operate from can are latter the compensations only private thus and BNB the of account the directly exporter the can Nor order. his advanceall but of sum this withdispose company a to or goods the the of of accountowner bank private a to transferred be longer no can Germany in goods the practice In

Growing German Influence

dacs eevd rm h epr o Blain compensatory Bulgarian of export the from received advances

clearly as a domestic economic policy in the context of the of context the in policy economic domestic a as clearly

w unilateral change in the German regulation triggers regulation German the in change unilateral w

rvt ofetn bten motn ad exporting and importing between offsetting private - 4) I a etr o h BB h Reichsbank’s the BNB the to letter a In 444). on, however, was not an inevitable outcome of outcome inevitable an not was however, on, s have to be transferred to the Reichsbank inReichsbank the transferredto be to have s 98

vt. n rnia bltrl clearing bilateral principal In ivate.

h cern sse wee the where system clearing the

October 5 October th

CEU eTD Collection 224. p (2004), Source: Note: Table of share growing the to clearing versusf due was This deficit. exchange foreign levs million 20 contrary the on but position exchange foreign the increase not did which states realization report that this aimof depends (Ibid.). on external factors the payments of balance positive a secure to efforts bank’s the decreasin Despite exchange. the and account clearing the in reichsmarks blocked growing the of figures the provides 1934 for report annual BNB The prescribed. agreement official the as monthly cleared being not accounts the to immediate One negotiations. in hand upper the had which authorities, German the to power more gave also It Bulgaria. in Year 1934 1933 1932 Year 1934 1933 1932 s hw i tbe , h ya 13 sw tae upu o 35 ilo levs, million 305 of surplus trade a saw 1934 year the 8, table in shown As

* 8 Including blocked internal transactionsfor . Foreign Foreign Flows . Exchange 1932 BNB BNB

Total Total 2859 2778 3544 cambio Total 2879 2759 3678 cambio Annual report for 1934. N8426. in BNB Collection of Documents, Vol. 4 Documents, of N8426. 1934. Collection BNB Annualin report for

ree Collection trade(BNB Vol.of 4. documents N8426, p 224).

Outgoing foreign exchange in million levs Outgoing exchange foreign exchange foreign inmillion levs Incoming 1372 1301 607 Clearing 1513 1439 684 Clearing

Free Free 684 1038* 2613* exchange Foreign 487 858* 2305* exchange Foreign Free

result was the accumulation of imbalances, due imbalances, of accumulation the wasresult

99 - 94 - - transactions internal for exchange Foreign Blocked 67 - - transactions internal for exchange Foreign Blocked

1934. Central EuropeanUniversity,Budapest

g amount of available free foreign foreign free available of amount g

127 189 138 accounts in blocked Banknotes 190 250 271 accounts in blocked Banknotes

602 231 320 Compensations 602 231 320 Compensations

Vera Asenova –

caused a caused

CEU eTD Collection (Ibid., declined had countries exchange free with trade while grown had account countries clearing with volume trade that evident is it report annual BNB 1938 the 1939. March, 29 N2630, 1938, Report (Annual million 811 to grown had surplus trade the while achievewas to compensation. than through easier a through Export 406). p (Ibid. invalid become would they which after period limited a for issued were permissions special Reichsbank; the and BNB the by approved be to had deal Each authorities. national the by regulated clearings the in enforced exchange of rate artificial an from “departure for allow they but claims frozen of liquidation the for allow not do they coincidence”; “double the find must exporter and importer both that require they Compensa 1941:15) (Ellis, value.” equal of import an by a involving export eachof of parcel offset immediate rather an but account all balancing of items, periodic book open against proceed advances. not does blocked “trade bila where clearing, a with as trade Ellis by by defined are generated Compensations necessarily not are accounts blocked in Banknotes domestically. exchange foreign of purchase and sale from but intern for exchange Foreign non from resulting exchange of exchange bills and banknotes Foreignto refers Free abroad; BNB of accounts clearing the to refers Clearing exc bills of other and checks banknotes, in exchange foreign to refers cambio Total times. half a and two almost rose asset frozen the and 1934 and 1932 between considerably decreased Table 8 shows the dynamic of free and frozen accounts accounts frozen and free of dynamic the shows 8 Table n 98 t 1938 In Bulg e ie f h oeg ecag dfct a aray 2 mlin levs, million 221 already was deficit exchange foreign the of size he arian National Bank Collection of documents of Collection Bank National arian hange issued and payable in foreign countries but traded locally.traded but countries foreign payable and in issued hange al transactions did not originate from international trade international from originate not did transactions al 100

ea arneet dfeet from different arrangement, teral

” (ibid.) Compensations were still were Compensations (ibid.) ”

etaie cern account clearing centralized in ae iia t barter, to similar are tions - clearing trade. Blocked trade. clearing

o. . 21. From 261). 4.: Vol. –

h fe account free the CEU eTD Collection Source: Table 9). (Table 1937. of exception only the with balance positive persistent a to leading implemented provisio agreement’s the Despite account. clearing Bulgarian the in assets blocked of exports increase steady of a in increase resulted The bank. national the to transferred were operations trade effect adverse an had also It partners. trading its diversify to economy Bulgarian the of chances the limited trade international demonetized the of structure very the efforts, legitimate as seen suppli material raw industry’s local the secure to and exports promote to efforts bank’s the by empirically established and economy national the for appropriate as announced was regime of lack the monetary income. ofexpression notan but tool accounting onlyan is exports of value the monetary and tradi a that means This 260). As bilateral clearing gained force, the national bank justified its dominance with dominance its justified bank national the force, gained clearing bilateral As

9 1939 1938 1937 1936 1935 1934 1933 . Foreign Foreign balance. exchange ofBNBmillion in levs. Year BNB Annual BNB report 1938.for

lentv mres o te o qaiy ugra eprs Te clearing The exports. Bulgarian quality low the for markets alternative Incoming 9 868 4 388 2 644 2 583 1 770 1 689 2 434 2 434

s Blain ainl ak 20) Ee tog tee a be can these though Even 2004). Bank, National (Bulgarian es

Expenditure n h dmsi bns n cei isiuin woe foreign whose institutions credit and banks domestic the on Clearing Account Clearing 3 577 2 855 2 414 2 256 1 593 1 490 9 415 9 415 tional source of foreign exchange is no longer available longer no is exchange foreign of source tional

s rglr aacn o te cons a not was accounts the of balancing regular ns, Balance -

BNB Collection BNB Documents of

453 811 211 327 177 199 20 101

Central EuropeanUniversity,Budapest

Income Income 1 491 1 336 1 221 751 524 487 858

Expenditure Expenditure 1 453 1 264 1 038 908 966 525 684 Free Acc Free

Balance Balance

Vol. 4 p 4 p Vol. 260. - - - ount 157 255 197 180 38 72 - 1

Vera Asenova

CEU eTD Collection not did Reichsbank the However,industry. local the in used all metals other and iron, rubber, leather, wool, cotton, included materials raw of list secret The companies. importe materials raw of purchase the for only free in paid used be could which be account, free special to a to transferred was revenues latter The currency. export Bulgarian the of percent thirty for allowing an achieved BNB the the Finance of of governor ministry German the and Reichsbank the to visit his during 1933 ofconvertiblenegative balance currency. export exchange blocked versus exports exchange free the of harvest relative Lower vegetables. and fruits Bulgariaexported market clearing the for while fodder and seed sunflower oat, barley, corn, mainly are market exchange products The place. in structure trade the of result the are account free the of dynamics sharp The levs. free m 157 negative of balance the exchange to contributing 1938 in increase countries exchange free from free lev m to776 generating countries exchange went export total of percent 14 only 1938 in while exports total of percent 26 for accounting countries exchange free to export through generated was currency tabl Thus clearing. by replaced completely not was trade Free straightforward. less is account free The agreement. clearing the under importing was it than more exporting was it means which account, exceptio the with that shows also It growing. was whole a as flow trade that means which side, outgoing and incoming the on both 1939 and 1933 between increase steady a shows account al 9 hw te yai o te laig n fe acut. h clearing The accounts. free and clearing the of dynamic the shows 9 Table The other source of free exchange was the free account with Germany. In May In Germany. with account free the was exchange free of source other The o 13 Blai hd pstv blne n h clearing the in balance positive a had Bulgaria 1937 of n 9 hw ta i 13, 23 lv wrh f free of worth levs m 1273 1937, in that shows 9 e mnmn t te iaea cern agreement clearing bilateral the to amendment 102 s in free currency. At the same time importstime same the At currency. free in s

d to Germany and traded by German by traded and Germany to d

Bulgaria exported to the free free the to exported Bulgaria ws h cue f a of cause the was s CEU eTD Collection a for on later and goods industrial German for exchange in materials raw and goods and trade total German the weak too not was position bargaining Bulgaria’s though Even 1938. in percent nine only and Source: Table owedthe transferred (Table exchange and free 7). difference the between the from is evident account. This the free to exports Bulgarian th than less transferred and obligation its fulfill rmaments 1938 1937 1936 The importance of Germany as a trading partner was growing both in terms of of terms in both growing was partner trading a as Germany of importance The 1936in percent paidfourteen currency Germany free in thirty percent of Instead

Year 10

Berov,1979.

. The. Free account 1936

vis .

government. - (in million million levs) (in Germany Austria and Bulgarian à - vis in terms of of terms in

Germany, the power to enforce the free account clause lay with lay clause account free the enforce to power the Germany, 3284 2364 1976 Export to

laig rd (al 6. ugra xotd agricultural exported Bulgaria 6). (Table trade clearing

(in million million levs) (in Account Free assets theAvailable in -

1938. 103 302 358 208

Central EuropeanUniversity,Budapest

e negotiated 30 per cent worth of the of worth cent per 30 negotiated e

total trade total of Percentage 15 14 9

(in million million levs) (in due 30% = Total Vera Asenova 985 709 592

CEU eTD Collection wine, raki tobacco, oil, rose coal, lard, animals, and meat vegetables, fruits, included BNB the by approved items export of list The compensations. private of regulation of Germanbranch a commercialb Sofia Kreditbank, the to transferred were side Bulgarian the from sums clearing The 307). (Ibid., claims German old of payments the covered cent per 75 remaining this of cent per 25 least at that condition the on levs million 50 for Bulgaria from tobacco bought Reemstma firm tobacco German the following: the was agreement The 306). (Ibid., accounts enforce to aimed agreement The 1979). payments (Berov, 1932 of spring the in signed theyear respectively.of Note University State 1934 Source: trade. clearing Table 1939a 1938a 1938 1937 1936 1935 1934 Year , ar pout, aln sgr n wo. h dsgae iprs from imports designated The wood. and sugar kaolin, products, dairy a, - oehr ih h cern areet h BB sud n riac fr the for ordinance an issued BNB the agreement clearing the with Together – 1939.

h frt laig gemn bten h BB n te ecsak was Reichsbank the and BNB the between agreement clearing first The

For 1938For 1937 to and dataexport/import the refers and first five four months

Christophorov,1939.Assen. Development the of Business CycleBulgaria in The. ofimports share total andin German exports total tradein and

72.81 71.68 77.24 65.52 69.44 77.25 78.97 Export total in Clearing o emn xotr, hs rvne wr bokd n ugra bank Bulgarian in blocked were revenues whose exporters, German to

Works ofthe Institute Statistical the Works for Economicat Sofia Research

Export Shares in percentage Shares in Export , issues, 1 59.43 51.49 58.86 47.11 50.53 49.48 48.05 Export total in Germany

sum be spent on future German exports to Bulgaria and the and Bulgaria to exports German future on spent be sum - 2 (in Bulgarian) (inBulgarian) 2 81.63 71.78 76.21 71.91 72.78 68.09 60.84 Export clearing total in Germany

ank (Ibid.). 27.19 21.4 22.76 34.48 30.56 22.75 21.03 Export total in clearing Non

104 -

Sofia.

80.89 74.74 74.02 79.9 81.7 80.19 78.3 Import total in Clearing

Import Shares in Import percentage 61.04 54.1 51.43 58.22 66.67 59.82 48.87 Import total in Germany

75.46 72.38 70.22 72.82 81.58 75.11 62.43 Import clearing total in Germany

19.05 25.32 25.98 20.1 18.3 19.81 21.7 Import total in clearing Non

CEU eTD Collection 32 outlevs million 631 to equal deliveries these of share biggest the had Germany 323). transportation other and trams German from equipment railways, locomotives, trains, stocks a of tobacco against trade quality old counter deteriorating already including with harvest depression the tobacco during Bulgarian accumulated entire the of sale t arranged It 1934. August 31 on signed deal” compensation tobacco “Big called the exchange bloc. control clearing under concluded was trade foreign agreem Bulgarian of cent per 80 1935 of almost end the By (1935). Netherlands the with (1934), Italy and Spain Turkey, with (1933), Hungary and Yugoslavia France, Poland, Belgium, Switzerland, Austria, compensation. percent hundred a as be seen thanClearing less compensationas a can hundred percent deal. to referred is which claims, outstanding required clearing unlike method compensation The control. exchange the of introduction the after Bulgaria in blocked been had that debt commercial German all covered which million 250 to increased (Berov, levs million 200 to only increased was it 1932 July in and failed levs million 200 to agreement partners. German Bu chemicals. non other zinc, tin, iron, industry, the for materials raw salt, derivatives, its and petrol supplies, medical were Germany

See Protocol 170 Protocol See ugra ocue cern areet as wt Czechoslova with also agreements clearing concluded Bulgaria h trig on oad a Germany a towards point turning The ents, which was the biggest share of clearing trade among all the states in states the all among trade clearing of share biggest the was which ents, lgarian exporters of the above products could also clear old debts to debts old clear also could products above the of exporters lgarian , of 30 May 1933 in in 1933 May 30 , of 32

1979, 309). By August the same year however the amount was amount the however year same the August By 309). 1979, In May 1932 negotiations to increase the volume of the clearing the of volume the increase to negotiations 1932 May In Cehsoa, utin n Hnain opne (Ibid., companies Hungarian and Austrian Czechoslovak, ,

BNB Collection of Documents Collection BNB n meit ofe o piae cons ih no with accounts private of offset immediate an - eru mtl, ubr mcie at ad agro and parts machine rubber, metals, ferrous 105 Central EuropeanUniversity,Budapest -

oiae xot tutr ws h so the was structure export dominated , 2004. 2004. ,

Vera Asenova i (1932), kia

he - -

CEU eTD Collection 33 and fruits of Exporters community. trading the among reichsmark the of devaluation even of fears spread lira Italian the and krona Czechoslovak the florin, Dutch the francs, Swiss and French the of devaluation 1936 The reichsmarks. million 10.1 was BNB the of account clearing the 1937 April of As account. clearing German the lev deposit to importers enough not were there because revenues their waiting receive were exporters to some that still Bulgariameant of surplus export The 3.4. the needsderivatives of the Ministr for its and petrol including materials raw of import The account. clearing the under all leather and threads silk oil, sunflower for exchange in machines agricultural German b of foreign increase considerable a for Germany free of instead reichsmarks exchange. blocked accumulating bank central the clear a was intere of There conflict 477).” p 2004. Documents, of Collection (BNB side German the from measures “repressive provoking without countries other with diversification export recommended which board, managing BNB the to alarming were reichsmarks Easternonly regardEurope. to in goods were of perishable characteristicGerman of trade notlargemethods quantities lo at selling of practices The price. lowest the offering by achieved was which 323), (Ibid., levs million 910 of

The term used for “quota” used for term The

The considerable share of German trade and the increasing surplus of blocked of surplus increasing the and trade German of share considerable The

FinancingofExporters and Inflationary Effects 33

Nevertheless, in October 1939 the BNB signed a new agreement with agreement new a signed BNB the 1939 October in Nevertheless, sts between the export sector demanding higher export quotas and quotas export higher demanding sector export the between sts

in the contemporary literature is “contingent”. is “contingent”. literature contemporary the in e ad uig t ihr hn ol pie ad targeting and prices world than higher at buying and wer

y of y account. were the of under all free War 106 ilateral trade. It provided for the import of import the for provided It trade. ilateral

advances in advances

tual CEU eTD Collection legislation. 34 the and BNB the by taken unilaterally was step the Although Reichsmarks. blocked levs governmentat bank 33 per mark. central The the from mark. reichsmarks of worth per levs million levs 82.388 to 32.50 up bought afterwards of rate exchange fixed a at exporters organizewas years consecutive five for in Journalthe new theOfficial July N160of2 directive published 1936. R Public (Central risk rate exchange the to exposed be not could bank central the as government the by BNB the from bought be would marks These exporters. vegetable and fruit to marks to clearing of same the at ratio 2:1 the that while categories export all for preserved formally be should proposed payments compensation further BNB The solution. better awould be question in the exporters Reichsmarks of the of percent hundred a buying that suggested and suboptimal economically as arrangement this reported BNB the compensation private Finance of as Ministry the to letter a In exporter K). 285 F Sofia, Office, Records German Public (Central a from import counter as third one non these of exports the were threats. serious ris rate exchange the only not that argued They claims. accumulated their out buys it that demanding bank central the approached frequently poultry and eggs vegetables,

The O The k but also the non the also but k Initially, the BNB’s decree from 14 February 1936 stipulated that two thirds of of thirds two that stipulated 1936 February 14 from decree BNB’s the Initially, h fnnig rnil const principle financing The planned was and 1937, February 1 on started which exporters, of financing The fficial Journal is a government a is Journal fficial

time the BNB should start a quiet payment of 100 percent of the clearingthe of percent 100 of payment quiet a start should BNB the time

ecords Office, Sofia, F 285 K). The Council of Ministers voted voted Ministers of Council The K). 285 F Sofia, Office, ecords durability of their products and the lack of alternative markets alternative of lack the and products their of durability - durable goods would be paid from the clearin the from paid be would goods durable

- issued newspaper for the purpose of officially announcing new announcing officially of purpose the for newspaper issued itutes of new money issues backed only by the the by only backed issues money new of itutes d as a BNB purchase of reichsmarks from the from reichsmarks ofpurchase BNB a as d 107 Central EuropeanUniversity,Budapest

g account and account g 34 Vera Asenova

CEU eTD Collection organization corporatistlegitimized an domestically also economy. through was efficient German It the with integration for made consciously was choice Bulgarian the that example trade for valid only transactions was rate exchange This countries. European Southeast all years ten for stable lev the to relation in reichsmark the of value the The activity. economic of coordinator and manager central the as itself reorganized state The Reich. the with relationship the exiting of consequences negative the bearing fore of channel a became bank central the actors economic its of solvency the defending and interest national its pursuing by Nevertheless, Germany. to commitment political clearingunder (Ibid.). receivables and currencies foreign against levs in loans extend to institutions lending local allowed BNB the April 2 On 1999). (Avramov, 1942 and 1939 between levs m 800 1 from rose surplus Clearing (Ibid.). war and mobilization all guaranteed and abroad like developments adverse by fruit prevented were those other case in exporters to and payments grape of export the of risk political German crediting was could notand be renewed. government Bulgarian the months two for only exporters to guaranteed was RM of purchase The levs consumption. of issues new German the with of interest the with line mobilizatio its in exports in limited which government, was it Finance of Ministry Bulgarian or alternative an finding of instead continue to exports the allowing authority ign BNB complied strictly with German demands and changing trade rules and kept and rules trade changing and demands German with strictly complied BNB This policy was a reaction to a specific problem and not a result ofideological specific result problem or a a not and to policywas reaction This a statement a issued government the 1938 In

while officially the currency was fixed to the Swiss franc. This is anotheris This Swissfranc. the to fixed was currency the officiallywhile of interest and of policy. economic representation paternalistic

108

n effort. By financing its exporters exporters its financing By effort. n y hc i asmd h entire the assumed it which by levs to 15 000 m 000 15 to levs –

the longest of longest the

CEU eTD Collection Figure whatit officially the in became 1950s. g the economynational and the for institution credit a into evolving was BNB The 12). Table and 5 (Figure prices to continue (Ibid.,unable as Asenova, cited in 2008). w they agreements the honors Germany unless but regular and uninterrupted been have Germany to exports Bulgarian that acknowledge reports Various priority. Bulgaria the increase to Affairs Foreign of Ministry German the urges report ( Germany” from ordered have they goods the receive not do who entrepreneurs the from critique harsh face they as Germany with civil Bulgarian the For pos the support to difficult more ever becomes it servants develop. to going is connection this exactly how closely observeand Germany to veryconnected is strongly Bulgaria that knowstates Balkan develop in help German expects and needs German the to economy its adjusted has foodstuff, of supplier important very a is Bulgaria that writes also He inflation. of danger the poses which banknotes, of emissions new The i Bulgaria that explains Landwehr reichsmarks. Dr. by report 10 Germany give to time) the each at to citizen million equal (6,5 is Bulgarian states report the which 1940, in reichsmarks million 60 over is tha show (Reichswirtschaftministerium) economy the of Ministry German the of Archives The agreements. trade the honored However, the Bulgarian institutions demanded that the German authorities authorities German the that demanded institutions Bulgarian the However, The increased money supply caused a rise of the cost of living and wholesale and living of cost the of rise a caused supply money increased The 5

. Money. inBulgaria in levs. circulation million in in accordance with the signed contracts and to make deliveries to Bulgariaa to deliveriesmake to and contracts signed accordancethe with in overnment, which it had been originally envisaged as and and envisaged as originally been which overnment, it had

t the Bulgarian credit at the clearing account account clearing the at credit Bulgarian the t 109 Central EuropeanUniversity,Budapest

s crediting its exports to Germany withGermany to exports its crediting s udsrhv 4 I, 1303). II, 43 R Bundesarchiv ing its agricultural economy. agricultural its ing

ition of increasing the trade the increasing of ition

Vera Asenova eieis to deliveries ould be ould

The All

CEU eTD Collection last the in “e” 1943 year the For the that column means value isan estimate. households. workers for numbers Index * Note: Source: Table Palgrave McMillan. Source:

12 10000 12000 14000 16000 18000 20000 2000 4000 6000 8000 1943 1942 1941 1940 1939 1938 1937 1936 1935 1934 1933 1932 1931 1930 1929 Year

League ofNations Yearbook Statistical 1942 Mitchell, Brian. 2007. 2007. Brian. Mitchell, . Indices. of priceswholesale andof living cost ( 0

Year (1929100) = Wholesale prices 1929

144.6 120.5 1930 95.7 74.8 66.7 65.5 62.8 55.4 54.4 53.4 52.4 58.3 66.8 81.2 100

1931

Money in Circulation, Money1929 in Circulation, 1932 nentoa Hsoia Statistics Historical International

1933 (1929100) = Costof living (in million levs) *114.7 84.2 67.9 61.6 60.1 58.1 57.0 59.5 63.7 68.2 73.4 79.9 91.5 100 1934 110

1935

1936 e 221 178 135 112 100

1937

- 44.194 pp. and 199.

- 1938 1942 the year 1929 = year 1929 100) the 1939

1940 uoe 1750 Europe 1941

- 2005, .

CEU eTD Collection Germany from them surplus its despite on the clearing account. for parts spare and vehicles machines, of purchase the for of one and levs loans two issued BNB the purpose that For Bulgaria. in forces German the finance to Reichsbank the with agreement an signed and powers Axis Source: Figure living index i living of cost the 1943 of cost the 100, index and an with basis the were 1939 year the If percent. 120 increased 1939 between that shows It value. 1939 the at set column last The living. of cost in rise the surpassing prices wholesale in rise the with rise to begin indices both 1936 In falling. are living of cost the and prices wholesale the Table 12 shows that between 1929 and 1936 we see a steady deflation steady a see we 1936 and 1929 between that shows 12 Table Bulgaria finally suspended the nominal gold standard in 1941 when it joined the joined it when 1941 in standard gold nominal the suspended finally Bulgaria

shows the dynamic of the cost of living index if the base of 100 percent was percent 100 of base the if index living of cost the of dynamic the shows 100 120 140 League ofNations Yearbook Statistical 1942 . of Indices prices cost ofwholesale and living. 20 40 60 80 0 n five years’ time is years’ at five estimated n time 221. 1929

Indices of wholesale Indices wholesale ofand Living prices Cost of 500 million levs to cover the army’s needs and another 1 270 million 270 1 another and needs army’s the cover to levs million 500 1930 1931 1932 1933 1934 1935 1936 1929 1937 1938 - 111

1939 1942

Central EuropeanUniversity,Budapest

1940 1941

1942 - 44.

Cost of Living Cost Prices Wholesale

–

one of 400 million 400 of one Vera Asenova

–

both

CEU eTD Collection those above goods German of prices in increase the and pressure German under implemented tariffs import of reduction the by affected also were trade from gains Bulgarian The goods. agricultural and industrial promised the deliver to failed often 113). 1986: (Lampe, transaction” the balance to forthcoming immediately not are imports German if Bank National Bulgarian the by emitted notes new in exports Bulgarian trade and clearing “ac should new Bulgaria that stipulating 1940 A in signed was 109) agreement 1986: troops.”(Lampe, occupation its for later and Greece and Yugoslavia on attack 1941 its for first army German the supplying us Hranoiznos, food, of export for bureau state The 108). 1986: (Lampe, minimal was agriculture of modernization the or technology pulping developing in role Germany’s export, of increase this for demand German of exports vegetable and fruit while exports, all of percent 11 to increase huge a registered Pulp declined. price its while increased ( 1943 total of percent 72 already was 1942 in 1996:417). (Nikova sector industrial Bulgarian the of upgrading long the coordinate to order in operate G joint a later year A army. German the of demands growing the with line in Germany to export Bulgarian the organize to German special a 1940 In and money over control The 3.5.

During the war Bulgaria had a continuous export surplus with Germany, Germany, with surplus export continuous a had Bulgaria war the During

ap, 1986). Lampe, WartimeEconomic Relations

oac cniud o e h mi epr ie. t quantity Its item. export main the be to continued Tobacco - Bulgarian economic commission was established in order in established was commission economic Bulgarian trade increased during Bulgaria’s participation in WWII. WWII. in participation Bulgaria’s during increased trade erman - term industrial cooperation and technological and cooperation industrial term value of trade and increased to 83 percent in percent 83 to increased and trade of value 112 - Bulgarian industrial commission began to began commission industrial Bulgarian

declined. (Ibid.). Despite the importance the Despite (Ibid.). declined. ed the collected “foodstuffs for for “foodstuffs collected the ed Trade with Germany with Trade cept payment for payment cept which CEU eTD Collection the bankno includes which circulation in money of value the is a+b 30/10/1944; until is data the a Note: Source: account,1940clearing Table by ofincreased means domestic money supply. Germany to exports of increase an promoted actively BNB the war the during clea the through kind in for and financially both Court Germany Nazi supporting and People’s WWII the the in Bulgaria involving by death to sentenced and prosecuted were BNB the of 1940:341). to e Bulgaria “someone for finance way a as 1940 of agreement last this saw contemporaries Some 117). (Ibid., cartel single a through it controlling by industry local of development the Indus Bulgarian German the economy, Bulgarian the of account Lampe’s In pressures 1986:115). inflationary (Lampe, upward creating market black domestic the to goods their init ially negotiated. In an effort to avoid the trap of clearing trade producers diverted producers trade clearing of trap the avoid to effort an In negotiated. ially 09/30/1944 1943 1942 1941 1940 Year In 1945 the BNB governor Gunev and all the members of the governing council governing the of members the all and Gunev governor BNB the 1945 In 13

–

BNB Collection of Documents Vol. 4, p 985 (2004) and author’s calculations; author’s and (2004) 985 p 4, Vol. Documents of Collection BNB

. Money in circulation and the increase of bl of increase the and circulation in Money . banknotes in circulation; b b inbanknotes circulation;

tes the and bonds government used domestic exchange. in

956 979 +23 888 308 +20 496 500 +13 830 +899 7 382 +780 1 levs) (in 1000s balance Clearing trial Commission of 1941 of Commission trial s’ wr truh nary o pie o te rdc (Lestov, produce the of prices low unfairly through war” lse’s ig cons Te rscto ws ae o eiec that evidence on based was prosecution The accounts. ring

–

09/30/1944. ( Increase year Year on percentage) 118 150 171 444

Government bonds used in domestic exchange domestic in used bonds Government

113 - (in 1000s levs) (in 1000s circulation Money in 2 is seen as an institution aiming to prevent to aiming institution an as seen is 2 a+b 55 519 945 945 519 55a+b Central EuropeanUniversity,Budapest b. 14 787 940 787 b. 14 005 732 a. 40

23 956 959 18 908 921 13 119 467 5 899 163 5 899

(percentage) Increase year Year on ocked reichsmarks in the in reichsmarks ocked

232 127 141 228

circulation circulation in money of % as Clearing Vera Asenova 43.19 58.87 84.76 71.35 58.66 30.18

CEU eTD Collection 1924. of prices at constant 35 Conclusion countries,whichthe werelost annulled. WWII by made Germany to credits commercial all 1947 of treaty peace Paris the With war. irretrie declared was claim This reichsmarks. million 15 of claim net a to amounts this claims the from levs billion 24 almost the but also this 43 percent.bonds drops shares to bills the only not theincludes circulation in money the circulation. When in money the reichs blocked the Effectively levs. 945 519 55 reaches total circulation the in currency tender of legal amount the to added if and levs million 15 almost reached Their volume transactions. domestic certain for exchange of means a as approved were increased money circulation in more than the clearing assets. the transactions domestic in used bonds government of issue increased the of rate growth the to similar rate a at grew circulation in Money Bulgaria. in base monetary the of share a as and

These claims are equal to to equal are claims These h Blain ses lce i the in blocked assets Bulgarian The termsnominal in assets clearing the of increase continuous the shows 13 Table

h government The marks served as a base for increased liquidity and formed almost 59 percent ofpercent 59 almost liquidity formed increased and base for a servedas marks

35 (Author’s calculations based on GNI data in Rangelova, 2000). in Rangelova, data on GNI based calculations (Author’s

- in 1944. If the German assets held in Bulgaria are subtracted are Bulgaria in held assets German the If 1944. in sud od, ae o te xotr’ lis n G in claims exporters’ the on based bonds, issued 11.8% of of 11.8%

Bulgaria’s laig ses ni 14 bt n 94 u t the to due 1944 in but 1943 until assets clearing

114 national income at current prices prices current at income national

ecsak laig con reached account clearing Reichsbank

vable after Germany’s loss of the of loss Germany’s after vable

8 mlin es r lot 500 almost or levs million 986

in 1944 1944 in

or e facto de ermany, to to 44.8% 44.8% CEU eTD Collection continued previous structures to operate while theactorsand the ideology changed. where system international new a to transition smooth a for setting institutional the prepared goods industrial for exchange in products agricultural and materials raw of supplier German a as experience earlier the but institutions similar very by faci only not was dependence economic This average. on trade total of percent with Germanycountriestrade other and and theproduction processes. governmen lasting a in resulted demands an through gradually Short problems. hoc developed ad with dealing everyday but framework ideological readymade a from desp continued trade that so theeconomy reorganized but shortage exchange foreignof problem the solve loya Bulgaria’s and recovery for strategy promising a as seen was policy This demands. itsto institutions and rules its adjusting activelyby one big the on dependent become partner trading main re its to Bulgaria tied but recovery economic marked a to contributed policy Its flows. trade and capital international all centralizing in its role and Bulgaria in monetaryregime the transformed bank national Bulgar the pressure German growing and Depression Great the to reaction a As lationship was of a client client a of was lationship lty was lty rewardedin and advance acknowledged ofits joiningtheAxis 1941. in y salsig mnpl oe mny n tae te eta bn dd not did bank central the trade, and money over monopoly a establishing By ae i te MA ytm eedne a t a iia degree similar a to was dependence system CMEA the in Later ite its absence. The solution was not derived from theory or or theory from derived not was solution The absence. its ite –

arn ye wee h sal tt alwd tef to itself allowed state small the where type, patron 115 Central EuropeanUniversity,Budapest mnpl oe mntr transactions, monetary over monopoly t

- term solutions in response to German to response in solutions term -

Nazi Germany. This This Germany. Nazi

Vera Asenova -

bu 60 about litated the ian

CEU eTD Collection interests oftheeconomic and managers economic process. domestic of agents as acted still governments partner trade foreign a on dependence While regime. clearing bilateral of framework the in economies national managed administratively to mobility capital global and capitalism market free from transition a capitalism, of model the in change a produced period interwar patronage.an of Thus, forms other and government financing received who producers and associations exporters groups, interest special among beneficiaries concrete had intervention state However, actors. private of freedom trade foreign over control state of extension The 1930’s. the in crises economic of effects institutional the detail in presents It state. the to actors societal from authority of shift a with coincided polity external larger of which cooperation, thesustains regime. process the in actors always are and interests their serving institutions upload not are states alway Small cooperation. of regime the of continuation and emergence the for matter state hegemonic the with integrate to needs or abilities choices, state’s small The 2001). (Janos, work” politics how of view mechanistic “a is it unfounded, completely not is view this While rules. its by play to had and influence of sphere a into absorbed simply as portrayed often are they regimes, hegemonic the support to not or whether choice of devoid as states small the portrays narrative traditional The Chapter 4: Effects of the Clearing Regime on Domestic on Domestic Regime Clearing ofthe 4:Effects Chapter This chapter demonstrates that the shift of author of shift the that demonstrates chapter This s passive receivers of international rules; they can under certain circumstances certain under can they rules; international of receivers passive s Structures: State Corporatism in Bulgaria in Corporatism State Structures:

and payments limited the economic the limited payments and ity from the small state to a to state small the from ity

ti - crisis measures in the in crisis measures

cetn a certain a accepting

116

CEU eTD Collection concentraticurrency isthe our of stability the for cause primary “The Schacht, told have to supposed is “Hitler Hayes to According 1991:582). (Temin, the economy” and society with German to central disagreements and demands their government. voicing while terror from freer much remained actors and groups societal time, the at politicians Bulgarian many by a to lead not tot did they but trade foreign of rules German changing to responses institutional direct were economy the of organization domestic the in changes The Bulgaria4.1. and Germanyin Hierarchical Relations and institutions. policies usually is thei transform and it control to capacity than their in primarily autonomy located assumed, greater have states small that demonstrates case This Germany. of model totalitarian the imitate not did government Bulgarian the one as stategovernment well agency export the as archives. the and associations exporters between correspondence corporate and statements e are state the and interest groups special between relations The interests. economic domestic served it as long as legitimate was Bulgaria in regime corporatist state new The 1979. Schmitter, eme the in resulted alitarian state like the Third Reich. Despite the national socialist rhetoric employed rhetoric socialist national the Despite Reich. Third the like state alitarian into representation interests of system its transforming While autonomy state of increase internal and decrease external simultaneous The n emn “err a … sd o oto gop ad organizations and groups control to used … was “terror Germany In gne f sae oprts mdl f aiaim s eie by defined as capitalism of model corporatist state a of rgence

on camp” (Hayes,on (Temin, quoted in 1987) 1991:582). xamined through the archives of the central bank; public bank; central the of archives the through xamined Central EuropeanUniversity,Budapest

a state corporatist state a Vera Asenova r domestic r

117

CEU eTD Collection el 406 1996: policy economic Bulgarian the of views dominant the studying in source politi all politicians and academics 37 repo 36 the organizing for plans postwar German the 1943 were In government. state the the to directed of interests the serving nationalism economic for calls and 1940 orde economic new the of foundation the for factor decisive the views be not should his war the criticized that saying Atanasov and Bobchev meeting. Society the at controversy post the Bulgaria including of favor in argued Tsankov Alexander Germany. by promoted Society Economic Bulgarian pro the until independence national the (Daskalov,2005). from practices and institutions foreign of adoption the to opposed as strategy developmental a as followed was specificity and na the on based policy of course new a 1944 until point turning this From catastrophe. national a of verge the on Bulgaria left War World First the after own criticized was models western of following blind of its policy The 410). 1996: (Todorova, to according institutions economic its of peculiarities abroad from institution economic successful every imitate and import cannot “We declares, Yanchulev Boris posed it threat the of warned and regime Nazi the of criticism expressed figures political and economic leading also but policies

ugra Eooi Scey ucind ni 14 ad nldd itnuse eooi experts, economic distinguished included and 1944 until functioned Society Economic Bulgarian n dtra pbiain n h junl f h Tae an Trade the of journal the in publication editorial An - rts emn oiy retto (eriv, 97. hr ws bg eae t the at debate big a was There 1997). (Georgieva, orientation policy German Economic dependence on Germany was not simply a result o result a simply not was Germany on dependence Economic state with disagree to free more groups societal Bulgarian were only Not

cal economy professors in Bulgaria were members of the Society. Its publications are a major major a are publications Its Society. the of members were Bulgaria in professors economy cal ( Икономически известия) Икономически ). ). - a eooi pa a i ws icse i 13, hc cetd huge a created which 1939, in discussed was it as plan economic war

r in Europe. The topic was not discussed for a year and renewed in renewed and year a for discussed not was topic The Europe. in r

–

half of the prime minister nominations, 37 out of 43 ministers and almost almost and ministers 43 of out 37 nominations, minister prime the of half –

37 ah ain tt sol sae h caatr and character the shape should state nation each ,

1938, vol.2 1938, on the role of Bulgaria in the postwar economic order economic postwar the in Bulgaria of role the on - 3 pp.1 3 - 19. to national economic independence. economic national to Idsra Cabr n Varna, in Chamber Industrial d

ite of the time (Todorova, (Todorova, time the of ite

cnmc needs” economic f a pro a f tional traditions tional - fascist or fascist Economic Economic 118

in 36

CEU eTD Collection relati 39 4.2 m of starvation 38 the in demands sectorinforeign concreteof trade thepursuit economic gains. mode German the imitating of result a not were organization trade foreign the in changes “pro was press local the in political moti and economic of separation the on insisted always contrary the on state Bulgarian The 2010). (Gross, region the in influence political its extend and credibility rep the use to hesitate not did Reich the and Europe Southeastern in high traditionally protectionism. for but autarky for not was nationalism economic for preference Their processes. Bulgarian the saw the discussed and economy the of development and Society modernization the for state the of The role leading regime. Nazi the of aspirations military and political cooperatio economic this which interests, invariably national the debates separated (Todorova, policy nationalism, Europe economic of Eastern terms in of Framed region 1997:413). entire the to specialization agricultural of thesis the of critique open an published Sofia visiting then representative – e and space economic European

German minister of food (1942) and minister of of minister and (1942) food of minister German Bulgarian ambassador to Moscow declares this position in front of the Soviet minister of foreign foreign of minister Soviet the of front in position this declares Moscow to ambassador Bulgarian Nahrungsfreiheit tto o piae im ad h clua atato o Gray o nrae its increase to Germany of attraction cultural the and firms private of utation ons in 1938 (CPRO 176K 176K (CPRO 1938 in ons vations for cooperation. Bulgarian diplomats often explained that the propaganda the that explained often diplomatsBulgarian cooperation. vations for h atoiy n rptto o te emn cnm ad utr was culture and economy German the of reputation and authority The o dmsi pltcl raiain u a ainl ecin o pcfc German specific to reaction national a but organization political domestic of l

illion people in the Soviet Uni Soviet thein illionpeople - emn cnmc eain a a opruiy o dac t advance to opportunity an as relations economic German wr ciiie i a eae ih h Gra economic German the with debate a in criticized were )

1/2562:

- emn nt “pro not German” 3) specially its part on “food freedom” (or food security food (or freedom” “food on part its specially – .

Franz Algriem. The Bulgarian economist Nikolov economist Bulgarian The Algriem. Franz on

agriculture (1944), author of the Hunger plan for the the for plan Hunger the of author (1944), agriculture

(Snyder, 2012 (Snyder, Central EuropeanUniversity,Budapest

ebr Backe Herbert - Hitlerist”. ).

iial, h institutional the Similarly, 38 wih sind an assigned which , sre fo the from served n Vera Asenova

hese 119

CEU eTD Collection necklace. and medal Alexander St. the von Ribbentrop Joachim 40 d German on conditional was use their but Bulgaria of property the increased account Bulgarian the in reichmarks blocked and integration closer Therefore organization. dependence on Germanywas by po encouraged state and process its modernize to know and goods capital valuable receive would production agricultural Bulgarian lead the as seen was Germany reasons of number a For policy. export the of priority a not was and role secondary decision political in represented well was and literacy of compa a enjoying was which population, the of most employed it economy; the of sector dominant the was Agriculture Germany. with integration encouraged which strategy, developmental F 316/1/189/19)Sofia, rely (CPRO, friendship on not and compete, to have they politics in that and promises certain any expect not shouldBulgaria that advised diplomats German1940 December in Berlin in embassy pa equal an Bulgariaas treated rhetorically Bulgaria to Romania from transferred was Dobrudja Southern of territory the 1940 September 7 on diplomacy German st allow to not interest best Germany’s in was it and space living great German the of part was Bulgaria press German the to According neighbors. its with territories contested negotiating increase Germany

To honor German involvement in this diplomatic v diplomatic this in involvement German honor To ugra adopted Bulgaria when war the of context the in salient more became interests political However, A s the the s trade d its pressure on Bulgaria to join the Axis powers at the same time same the at powers Axis the join to Bulgaria on pressure its d aac ws rdmnnl pstv fr Bulgaria for positive predominantly was balance

rong Russian influence in Bulgaria. With the assistance of the of assistance the With Bulgaria. in influence Russian rong ratively well developed social welfare system and high levels high and system welfare social developed well ratively

a model of integrationist foreign economic policy as a a as policy economic foreign integrationist of model a

n eooy n b itgaig ih t economy its with integrating by and economy ing 40 A te ae ie emn a least at Germany time same the At . rtner. During negotiations at the Bulgarian the at negotiations During rtner. ictory Bulgaria awarded Bulgaria ictory .

liciesrather than resisted to. . These assets were legally legally were assets These . - aig Idsr hd a had Industry making.

Herman Goerging and and Goerging Herman , th srto. The iscretion. aon of amount e - how 120

CEU eTD Collection Figure trade foreign of structure the add to in theasymmetries financing volumes trade as presented in we if convincing more even is trade foreign of structure the and power national of discussion Hirschman’s 1945). (Hirschman, p 59 of consists volume trade same The 1938. for later and military equipment. goods industrial German for exchange in materials raw and goods in shown as trade clearing and trade total created aThis disincentiveorienttrade to to different a partner. relatio the exiting of costs the higher the Reichsbank, the at assets blocked of amount the greater The materials. raw and goods on industrial of supplies had Bulgaria’s Reichsbank the leverage more the Bulgaria, of surplus export the higher in imports German total of percent 1.5 only for accounted Bulgaria from Imports of terms in both growing was partner trading a as Germany of importance The

7 . Asymmetric. dependence,Bulgarian trade toGermanyexports 1938 in

Central EuropeanUniversity,Budapest iue 7 Figure ret f oa Blain exports Bulgarian total of ercent Blai epre agricultural exported Bulgaria . the following 7. Figure

Vera Asenova nship. 121

CEU eTD Collection Figure influence onGerman theBulgarian economy. i government. currency convertible in made were Bulgarian the for countries third in fees freight of payments to and oil as such Germany from goods currency hard of import c also but free really not Bulgaria. of was account Germany, with trade clearing through acquired the was which currency, in free the However, reichsmarks blocked the of extent the to fr replace that shows 7 figure Additionally account. free the under percent 24 and account clearing the under percent 76 into divided was which imports Figure 7 shows that Bulgaria had a share of only 1.5 percent of total German total of percent 1.5 only of share a had Bulgaria that shows 7 Figure Source: At the same time the blocked assets also increased and with them the indirect the them with and increased also assets blocked the time same the At 8 . The. clearing the free account and ofthe BNB in ee trade, which would seem to indicate that German influence was limited was influence German that indicate to seem would which trade, ee

Hirschman, 1945.Hirschman, Assymetrictrade dependence, Bulgarian exports to Germanyin 1938 nrle b te ecsak Is s ws sind o the to assigned was use Its Reichsbank. the by ontrolled

- German trade. Thus even though payments though even Thus trade. German s s ws otold y h German the by controlled was use ts

Exports to Germany Nonclearingin Export to Germany Clearing in Total Imports BulgariaGerman in GermanImports clearing did not completely not did clearing million levs.

122

CEU eTD Collection it that position public the held government Bulgarian the time same the At Germany. to subordination the legitimized interests economic of convergence the view of point secure be could supply 1997). (Kirshner, dependence trade and monetary both of effects the through countries partner the were toeggs and theclearing exported mainly market. meat vegetables, and fruits Tobacco, currency. convertible of balance the adversely affected often harvest bad and exports clearing the to compared added value low produc These fodder. and seed sunflower oat, barley, exports Bulgarian was exchange free of source Another balance. trade negative the with country the is that assets, blocked of share count the of favor in rigged is movements capital StateCentral Archive 285K/5/250. Source: The system of financing through blocked accounts unlike a system of free free of system a unlike accounts blocked through financing of system The Coopera 1000 -400 -200 200 400 600 800 BNB Annual report for 1938, BNB Collection of Documents Vol. 4 p 260. and 260. p 4 Documents Vol. of Collection BNB 1938, report for Annual BNB 0 1933 Clearing and Clearing accounts Free balance, 1933 tion under bilateral clearing results in convergence of interestsbetween of convergence bilateral in clearing under results tion hs rm h Gra pit f iw oprto ad continuous and cooperation view of point German the from Thus 1934 1935 d at a lower cost as opposed to coercion. From the Bulgarian the From coercion. to opposed as cost lower a at d 1936 1937

1938 Central EuropeanUniversity,Budapest 1939 to the free exchange market of corn, of market exchange free the to ry, which holds relatively bigger bigger relatively holds which ry, Free Account Balance Account Free Balance Account Clearing

s oee wr o relatively of were however ts - 1939 Vera Asenova

123

CEU eTD Collection currency foreign limited very had Bulgaria and 42 exports Bulgarian for in France. purchases make to available need economic little very a was 41 this time the of economists Bulgarian the For 1940). (Kemilev, exports all of percent 83 and imports all of percent 88 already was trade clearing the 1934 i textile Bulgarian the for imported were leather and wool cotton, as such materials raw German exports. of regulation government’s German the by limited only was reichsmarks account free the with import to what Commi the through Germany towards value price than rather goods of quantity the on based allowances lev clearing the fixed it which thi close to order In amounts. bigger importing for levs clearing more secure to order in imports their for prices higher declared importers often Very it. with purchase could they items exact c of lists kept which BNB the at Imports for Commission special a with concentrated was trade of control bureaucratic The policy. government of result direct a is trade clearing bilateral on between relations the regulate to how and policy monetary domestic its organize to how over discretion Germany. inter its reorganized policy economic over authority foreign of acceptance its signaling thus and partners” trading and alliances [its] diversify to efforts make France ideo Nazi support not does

Ibid, Protocol 466. 466. Ibid, Protocol It could not do business with France significantly because because significantly France with business do not could It While giving up certain authority over foreign trade the state retained full full retained state the trade foreign over authority certain up giving While (Markov, 1984) (Markov,

42 Te an xot tm, oac, gs n wet wr directed were wheat, and eggs tobacco, items, export main The .

exporters and importers in the country. The degree of dependence of degree The country. the in importers and exporters ompanies, the amount of clearing levs they were allowed and the and allowed were they levs clearing of amount the ompanies,

national trade sector to achieve a more efficient cooperation with cooperation efficient more a achieve to sector trade national lohl te ainl ak sud n riac i 13 by 1934 in ordinance an issued bank national the loophole s . 41

The Bulgarian government in the 1930’s did not only “fail to “fail only not did 1930’s the in government Bulgarian The

logy and is doing business with Germany but politics with politics but Germany with business doing is and logy

so’ lcne. h BBs icein over discretion BNB’s The licenses. ssion’s ndustry. According to some reports byreports some to According ndustry. due to its colonial positio colonial its to due (Lake, 2009) (Lake, . It also completely also It . n France had had France n 124

CEU eTD Collection moreand specificallystate corporatism, namely: of corporatism of corporatist definition Schmitter’s state Philippe a fulfilling to of close comes form and structure the took 1930’s the in economy the of Coordination State4.2. Corporatism in Bulgaria 1932 primary a being and thelattertaking exporter imports. the majority of former the sectors, industrial and agricultural the of interests the coordinating meant interests the with clashed they when also but other each against clashed they when only not importers and exporters of interests the balance to position a in was government Bulgarian The one. corporatist ca of system Bulgaria for new political or threat appeal. military of use its on not partner trade foreign a as authority its and cooperation on is The emphasis decisions. political domestic were clearing under trade of promotion the and an or active program. militarization re economic international the controlof state remarkable

a but one socialist national a not was result a as emerged that system new The Reichsbank the at accounts blocked the toward bank central the of policy The ersnainl oooy ihn hi rsetv ctgre i ecag for exchange and supports.(Schmitter, 1974, p.93 in categories respective demandsofarticulation and leadersof selection their oncontrols certain observing their within categories, sta monopoly the differentiated by representational created) functionally not (if licensed and and recognized ordered hierarchically competitive, non compulsory, singular, of number limited a intoorganized are units constituent Corporatism can be defined as a syste a as defined be can Corporatism

pitalism that can be best, characterized as a state state a as characterized best, be can that pitalism

not coercion and the power of Germany is based on based is Germany of power the and coercion not

of the German government. This respectively This government. German the of - 4)

Central EuropeanUniversity,Budapest m of interest representation in which the which in representation interest of m - 1939

e n gatd deliberate a granted and te

lations in the absence of war of theabsence in lations

Vera Asenova - 125

CEU eTD Collection and thefirst activitiesand promoted trade on international took merchants Bulgarian more more when War Great the After kingdom. Bulgarian new the in organization trade of charge in were merchants foreign mostly (1878) Empire Ottoman the from the After Bulgaria. in distinctlypresent so been corporatism has period this after nor before neither 1930’s, the to specific is Bulgaria in corporatism State organizationThe 4.2.1. offoreign tr of aspects economic activity. organizer main the became government central the 1934 after only but review quasi a in functioned organizations political and economic social, various that mention to important also is state It 1974:105). neomercantilist authoritarian capitalist delayed liberal, “anti of criteria the fulfills Bulgaria 1944 and 1934 between period the For exports. Bulgaria’s of percent five only for accounting sector, industrial underdeveloped and small very popula rural percent eighty over to due classes defined well of lack the and homogeneity religious and linguistic ethnic, high relative Bulgaria’s by justified is This process. political the to relation in subgroups of position the and elections parties, politica of nature the in changes the with deal not does and sector trade foreign the My analysis focuses exclusively on the “system of interest representation” for for representation” interest of “system the on exclusively focuses analysis My a be to seems authoritarianneomercantilist state. (Ibid.p. 105) corporatism state … repressed. necessityfor structural not if of, element defining are regionalism or language ethnicity,class, on based subculturespolitical auth that such are and recruited narrowly executive party; single weak non are elections power; bureaucratic central to subordinated tightly are subunits territorial and:

tt croaim t corporatism State

- existent or plebiscitary, party systems are dominated or monopolized by a a by monopolizedor dominated are systems partyplebiscitary, or existent ns o e soitd ih oiia sses n which in systems political with associated be to ends

ade in in ade Bulgaria - oprts mne bfr te eid under period the before manner corporatist rte ae dooial ecuie n more and exclusive ideologically are orities

, the anti liberal, delayed capitalist delayedliberal, anti the ,

independence (Schmitter, ” tion and a a and tion of all of 126 l

CEU eTD Collection Bulgarian the of President Bulgaria; from eggs Uni of exporter biggest the was Brothers» «Yotsov firm 45 w imports The various countries. from 44 Public (Central products herbs, oils, ether other and oil rose products, oil grain, hides, processed (fre vegetables and fruits grapes, products, tobacco and tobacco 43 Yotsov: B for conditions market best the find to initiative private of freedom credit, export to access hands, Bulgarian in sector export the keeping whole, a as policy economic government’s the transportation, were questions the Such of Union. Office Central the at discussed were questions general while association, compuls became Union Exporters theprivate were of of Bulgarian members Union All exporters’importers. associations tim first the Traders. Bulgarian of Union General name the with traders of organization singular the established law same The Organizations. Trade the for Law the of 38 incl organizations trade functioning all 1935 In law. by banned were organizations social ( 1934 until association 1924 the of members were specialties different of Merchants state. the of policies customs the and agreements export and import methods, payment controls, quality trade, of organization the improving for policies

Hristo Yotsov was born in 1894 in the family of a wealthy merchant in Vratza, Bulgaria. His family His Bulgaria. Vratza, in merchant wealthy a of family the in 1894 in born was Yotsov Hristo h Uin f ugra Epres nldd h ascain o epres f gs and eggs of exporters of associations the included Exporters Bulgarian of Union The on of traders in the 1920’s; president of the Union of Bulgarian exporters 1935 exporters Bulgarian of Union the of president 1920’s; the in traders of on h motCnrl we Centrals Import The uding the Bulgarian Union of Traders were liquidated according to Ordinance N. Ordinance to according liquidated were Traders of Union Bulgarian the uding , All matters regarding a certain product were deliberated within the sector the within deliberated were product certain a regarding matters All which operated through local branches in each town as the only foreign trade foreign only the as town each in branches local through operated which 45

e traders were associated into sectors first and then into exporters and exporters into then and first sectors into associated were traders e UE ad h ipres f h Ipr Central Import the of importers the and (UBE)

Records Office, Sofia, Office, Records - yielding seeds, beans, wine and other alcoholic drinks, meat and lard, milk milk lard, and meat drinks, alcoholic other and wine beans, seeds, yielding re shareholding structures, which import which structures, shareholding re CPRO, Sofia, F Sofia, CPRO, ory under the Law for the Lawory theExport. Organization Control under and of for

rdcin ln, rc plc, euig e markets, new securing policy, price plans, production ere approved directly by the Bulgarian National Bank. National Bulgarian the by directly approved ere lain xot. s ttd y t drco, Hristo director, its by stated As exports. ulgarian

animal wastes, coal and ores, crafts and home and crafts ores, and coal wastes, animal 1580 1580 K/1/16). K/1/16). 1580

Bulgarian Union of Traders, established in established Traders, of Union Bulgarian Central EuropeanUniversity,Budapest

K/1/22) .

In 1934 all political parties and parties political all 1934 In hadpoesd, a ad semi and raw processed), and sh ed

raw materials for the industry industry the for materials raw 44 Mmesi i the in Membership . - 1944; chairman of of chairman 1944; Vera Asenova

This was This - indus - poultry, poultry, based 127 trial trial -

CEU eTD Collection Bulgaro the of chairman beauty contest. Bulgaria Miss first won the and 1947 in Trade Bulgarian 1983. central in Sofia in died Yotsov 1947. Commerce of Chamber Yugoslav Import the of Board Managing the exp of associations the with contact close maintain to was duty primary “Their products. standardization and diseases plant the of cultures.exported and produce size the monitors products, export the packing and sorting supervised also president EI central The control. quality constant conducts producers the of the association and institutes agricultural experimental and scientific waters, forests, administ the with cooperation in EI The goods. Bulgarian of export the promoting for and markets foreign and domestic the on research conducting for responsible is president Its Institute. Export the of responsibilities the specifies 1939 Kozh Minister trade by 435 N. Ordinance The principles. its and structure organizational the of overview good a give 1939 to 1935 from documents EI. the wa institutions other all and Institute Export the exporters, promotion. export in engaged actively of etc. institutions post credit facilities, storage the railways, the were institutions involved directly Other Trade. Organizing for Law the by 1935 in established (EI), Institute Export the subsidiary its with Industry and Trade of Ministry the (BNB), Bank National Bulgarian res f nml n pat rdcs. hi ojcie a dfnd s “all as defined was objective Their products”. plant and animal of orters l eprs ee raie floig src heacia srcue Various structure. hierarchical strict a following organized were exports All were export regulating institutions, state main The Directly subordinate to the president were the inspectors for animal and plant and animal for inspectors the were president the to subordinate Directly

ntttos h dsg ad mlmn al xot r export all government implement the and with 1580/1/16). relations design close who maintain institutions to needs Exporters Bulgarian In accordance with the law and the economic common sense the Union of Union the sense common economic the and law the with accordance In

The main organ for deliberation between the between deliberation for organ main The In addition the Bulgarian Foreign Service was Service Foreign Bulgarian the addition In

glto (PO Sofia (CPRO, egulation s the General Assembly at Assembly General the s In 1929 his younger sister Liuba sister younger his 1929 In

is ad oeot the foremost and first ie csos public customs, fice, hrv f 4 June 14 of uharov ain fr the for rations

of sown land, sown of

128 - -

CEU eTD Collection tobacco, produced (Ibid.)assisted by inspectors. the regional of quantity and quality domes the control the to abroad; competitiveness monitor tobacco’s Bulgarian to activity, compulsory a their in supervise exporters and the Cooperatives association organize Tobacco to had of also Union director The the (producers). and Bank Cooperative and Agricultural Agr of Ministry exporters’ the tobacco the associations, with relations for responsible was who EI, the at director ( and vegetables fruits of export the stor of assisting methods new on research production; conducting goods; nondurable the of control producers’ and the managing with contact associations functions, similar had refrigeration and canning for posts, the ports, the Minis the and Railways, stations telephone and telegraphs State Bulgarian the with contacts maintained ( production” of item Bulgarian exported the of competitiveness the increasing for possibilities the researching export; increasing to sacrificed being it prevent to order in consumption of rates the monitoring exporters; expo the with accordance in market internal the organizing markets; foreign possible as many as to products Bulgarian of export the directing and planning goods; export of quantities Bulgaria trade of activities the Monitoring country. the mandatory outside and in in activity their monitoring exporters and associations the organizing export; the of assistance encompassing h tbco xot etr wih a a oooy tutr, a is own its had structure, monopoly a was which sector, export tobacco The PO Sfa F Sofia, CPRO, s non rs CPRO, Sofia, F Sofia, CPRO, - ebr t te soitos cnrl fr h alte to allotted the for controls associations; the to members t; oioig h rltos ewe poues and producers between relations the monitoring rts; s by pushing the prices down but not below their cost their below not but down prices the pushing by s 5 K27) Te he isetr o transport for inspector chief The K/2/77). 259 clue te iity f iac, Bulgarian Finance, of Ministry the iculture, 259 K/2/77). Central EuropeanUniversity,Budapest try of Infrastructure. The inspectors The Infrastructure. of try

ing and processing and ing i mre and market tic Vera Asenova 129

CEU eTD Collection Sofia. in 1 from Institute Export the of and 1936 Export Grain of Department of director 1936; 46 non compulsory “singular, the words other in was Institute Export The EI. the of president the of approval the before announced Eve approval. granted trade foreign of Minister the after announcements make could president deputy the absence his in and press the to announcements make to authorized was he only print; to went they to had th on publications any president approve EI’s The K/2/77) 259 F this Sofia, keep (CPRO, to confidential. oath information an took they officials; government including persons external perso administrative Kanazirski Georgi Kozhuharov (Ibid). accordi allowance EI’s the without region designated their leave not could they 1939 April 29 of As them. by issued certificates quality the as well as correspondence outgoing and incoming all pa They exporters. and producers between contracts in setting price “correct” the ensured and logistics, and transportationimproving of ways for investigated Institute; Export the of requirements qu conducted They packing. and sorting quality, to regardwith expectations markets’ the about exporters the informed They shipped. and loaded was merchandize the before ports or stations products, export

Born 1884 in Bourgas, mayor of Bourgas 1925 to 1931; member of the National Assembly, 1931 Assembly, National the of member 1931; to 1925 Bourgas of mayor Bourgas, in 1884 Born All these activities were kept confidential following the order of the EI president, EI the of order the followingconfidential kept were activities these All the for control quality exercised and volume the monitored inspectors Regional

supervised packaging the durability and size of carts at the export the at carts of size and durability the packaging supervised

nnel to give away any information regarding the EI’s functions to functions EI’s the regarding information any away give to nnel lfcto cuss n peettos n h administrative the on presentations and courses alification n 5 et 98 I ws obde t al ueurt and bureaucrats all to forbidden was It 1938. Sept 15 on trolled their regions five times a month and reported to the EI the to reported and month a times five regions their trolled g o riac N 31 y h Mnse o Frin Trade Foreign of Minister the by 381 N. ordinance to ng

e national export policy written by bureaucrats’ before bureaucrats’ by written policy export national e n the starting date of the grapes harvest was not was harvest grapes the of date starting the n - competitive, hierarchically ordered ordered hierarchically competitive, 938, dies in 1939 1939 in dies 938, 130 -

CEU eTD Collection themaximumcontrolled import qualit and prices and importance their to according import for goods the prioritized Directorate The associations. related other and Import Centrals the disband and reorganize establish, export the Bulgarian of name good the damaged have to proved was company the if refused was license A activities. its of file a kept which Directorate, the at Importers of Register apparatuses, appliances, electrical E products, vehicles. motor and instruments leather and and leather petrol goods, lubricants, household food, cosmetics, and drugs chemicals, machines, import the covered and validity year one had license The trade. import of sphere the in experienced and competent sufficiently was management its that testifying required was commerce of fraud of record no levs, 000 250 of capital minimum a have to had Directorate, the from license a special needed enterprise registered a import, to allowed be to order in (1939) Abroad so less but much exports its on than imports its on leverage Germany from deliveries import the for BNB the at commission special The Directorate. Trade International the of undertaking monopoly the was trade management. (Schmit state” the by created … categor[y] A imports all of control and management organization, the exports, to Similarly crig o Ordinance to ccording - vis rdr bod r violated or abroad trader or intentional bankruptcies. A certificate from the regional chamber regional the from certificate bankruptcies.A intentional or of the following items: textile and textile raw materials, metal and metal materials, raw textile and textile items: following the of

- à - vis

the German the authorities. fe 1935 after - Law for the Organization of Import of Goods from from Goods of Import of Organization the for Law ach license to import issued was entered into the into entered was issued import to license ach Te ugra sae a udutdy more undoubtedly had state Bulgarian The . f ahns a as i cag o military of charge in also was machines of Central EuropeanUniversity,Budapest

e, 909) o te ups o foreign of purpose the for 1970:93) ter, vis h lw Te iity a te ih to right the had ministry The law. the - y standards. à - vis

the domestic economic groups economic domestic the

Vera Asenova 131

CEU eTD Collection abroad contacts friendly of use the encouraged 1936 May 1 from representatives commercial the to letter his in and tool marketing the promote to as “invisible export” well as authorities trade local with relations good maintain to Bulgarian imported of all support and monitor to control goods; quality provide to had They threats. possible any about timely signal to and market the to access quick acquiringtape, red of reduction agreeme bilateral existing under Bulgaria from quantities import allowed the and country the in market the of organization administrative countries, other from competitors tastes, and preferences on report to were They there. products Bulgarian place to opportunities the for investigate look and to markets task foreign the had they them, for prices possible best the acquiring orga trade of system the in agents intelligence thekey the were Those at embassies. Bulgarian attachés commercial and the on demand relied government German the on export to information opportunities For needs. export and import Bulgarian higher increasedsacrificed was for exports. not a consumption at local However, market. are local the for exporters producers than level the hierarchical demand foreign on dependent asymmetrically is regime this Because control. of agencies government of and representation unions interest it by established the through state the by balanced were market the to iain Wrig o te ae eea ojcie icesn eprs and exports increasing objective, general same the for Working nization. t h itrainl ee te tt hd o aac German balance to had state the level international the At access their and importers and exporters of interests system clearing a Under The director of the EI, identified commercial propaganda as as propaganda commercial identified EI, the of director The -

tourism ofcitizens intourism foreign Bulgaria. issues of demand, prices, the market’s capacity, consumption consumption capacity, market’s the prices, demand, of issues t. hy lo a t wr b dpoai mas o the for means diplomatic by work to had also They nts. Bulgarian (organized and individual) exporters and exporters individual) and (organized Bulgarian

journalists, artists, sportsmen and sportsmen artists, journalists,

the most powerful most the ead ih the with demand 132

CEU eTD Collection 14 minimum “Bolgar” to sor a of name the changed Ministry 47 clearing, Germany w exporting under to grapes deals when 1936 November 17 on Vylev trade of minister by ordered As fine. a pay or EI the inform to had allowed quantity deliver it to the unable all was companya export. If care especially was state the therefore convertible currency against market free the on exportable were Grapes allowed. not was re as well as company another to allowance export in was advance for order announced This volume. smallest the to biggest the from assigned was priority year, previous England to exporters timin and quantity firm’s Each well. as firms domestic of interest the in doubt no was markets, foreign nation the and state the of expectations great the fulfill to “efficient, order in extremely accurate” and flexible be should service commercial foreign The bureaucratism”. sta a is EI the though even that emphasized president the Finally, avoided. be would interest of conflicts that so prohibited were parties third of or behalf on abroad them through officials Bulgarian the of activities commercial private All confidential. kept otherwise and EI the to copied was exporters Bulgarian interested and attaché commercial the between correspondence All efforts. special required placement their markets, European the on unrecognized and newwere goods Bulgarian the Because 25 F Sofia, (CPRO, brand Bulgarian the promote to figures public other

Only allowed for the best quality grapes. In its efforts to promote Bulgaria as a good trademark, the trademark, good a as Bulgaria promote to efforts its In grapes. quality best the for allowed Only te institution the commercial advisers should keep in mind that “trade tolerates no tolerates “trade that mind in keep should advisers commercial the institution te The officially set goals set officially The al economy”,al Kanazirski’sSofia, (CPRO, concludes K/2/77). F259 letter (CPRO, Sofi (CPRO,

percent

sugar and weight of 350 grams pergrapes 100 350 grams of weight and sugar g of export followed a pre a followed export of g

a, F 259 K/2/77:279) 259 F a, 47

ee ree acrig o h epre vlm i the in volume exported the to according ordered were

t grapes from the Turkish name name Turkish the from grapes t exporting as much as possible to as many as possible as many as to possible as much as exporting

every day of the week each week. Giving up the week.Giving weekthe each every up the day of . In September 1938 the qua the 1938 September In . Central EuropeanUniversity,Budapest - approved schedule. For example grape example For schedule. approved ful not to miss an opportunity for for opportunity an miss to not ful ere signed with the clause“valid with signed ere the - xotn fo ohr countries other from exporting

“ ( Afuz” CPRO, Sofia, F 259 K/2/77: 259 F Sofia, CPRO, lity of the exported Bolgar is Bolgar exported the of lity , still commonly used today, today, used commonly still Vera Asenova K/2/77). 9

486) 133 .

CEU eTD Collection eoito bten h epres te xot nttt ad l rltd state related all and Institute Export the exporters, the between negotiation criticism. and demands voiced often they nevertheless circumstances, the of view in legitimate and beneficial as arrangement institutional this saw exporters The The 4.2.2. i thecountryof (CPRO, exported they were to F K/2/77:251). 259 Sofia, units measurement and language the in high), cm 2 lock, (Caps labels quality tomato alumi of kind the peppers, of export for crates wooden tradeof quality foreign the specified of personally minister The of. made were they wood of kind the and exported was pulp plum which in barrels the of size the set to issued was ordinance ministerial products certain for ( only required was N11 declaration amendment the to Prior office. customs the for document necessary a was which of copy a N11 declaration t by set period a for granted was permission Export importer. the with payment of method agreed the specifying and goods export their of value declaring by BNB the of permission the request exporters Finance of Ministry the by approved and BNB the of Board Managing the by adopted was Law Exchange Foreign in Trade the of e such exchange market, strawberries. as other to applied rules same The export. issued for BNB N11 the declaration that after only and invoices the registered and checked goods, these for prices export minimum the set EI The EI”. the of approval the after only PO 1580K/1/29) CPRO Due to the increasing assets in the blocked account in Germanyin account blocked the in assets increasingthe to Due

num used for canning tomato tomato canning for used num nterests . of e xot otos ee eald n mtclul apid A applied. meticulously and detailed were controls Export xporters

purée

n ee te ie f h ltes n the on letters the of size the even and

4 coe 13 rln ta all that ruling 1939 October 24 h kn, uniy and quantity kind, the e bank he prs o h free the to xports an amendment an

y su of issue by The The 134

CEU eTD Collection gr of export record the for members union’s the congratulated he 1935 In sector. export the for challenges and achievements “ (CPRO, Sofiasuccess” 1580K/1/16). a and markets to access for fought are wars century; patriotism his end To agreements. trade foreign and monetary all over BNB the of monopoly the of he which economy, wha economyas “steering” as the the understands in intervention state competent a for advocates time Yotsov same the At export. to barriers creating for criticizes he which bureaucracy, c He privatealike. and resources public half with experiments it when not but qualification and capacity needed the has administration the if legitimate only is intervention State a it when not but moment present the of goals political desirable the with line in guidance provided state the if acceptable be opinion, an waswhich ignored often give to asked only that were associations explained interested He the discussed. (1937) currently being are sector the of problems concrete when Ch the at commissions level lower all in included be Exporters of Union the of representative a that advocated He policy. export efficient and coordinated a achieve to way only Bu of Union the of director Yotsov, Hristo trader, the of Day the of occasion the on his speech In EI. the at Assembly General the of framework the in place took institutions His comment on the increased state intervention in the economy is that it would it that is economy the in intervention state increased the on comment His In various articles, speeches and reports Yotsov presented the main main the presented Yotsov reports and speeches articles, various In lgarian Exporters, stated that negotiating among all interested parties was the was parties interested all among negotiating that stated Exporters, lgarian mes f omre BB te alas mnsr o tae n idsr etc. industry and trade of ministry railways, the BNB, commerce, of ambers - nue sec h sae ta te urn cnuy s n economic an is century current the that states he speech infused even when well and interest. argued of national

alls for greater responsibility on the part of the thepart of alls responsibility greater on for ssumes the right to manage private property. private manage to right the ssumes apes, which in his view was due above all due above viewwas his in which apes, Central EuropeanUniversity,Budapest ole in the right direction. He approvesHe rightdirection. the in ole - huh rgltos n wastes and regulations thought firm statecraft is vital for for vital is statecraft firm Vera Asenova

135

CEU eTD Collection currency. convertible or clearing for companies foreign from rented be to had wagons such and exports goods nondurable 48 transportation of state set by railways the currencyforeign the theBNB. policy and of 1580/1/1 (CPRO Bank Cooperative and Agricultural Bulgarian the by granted conditions credit export better to access view their in had which monopolies, oil rose and tobacco the for support state the against under a through goods local of policy rate theexchange policy,economic which theprices and artificially suppressed veterinary general coordinated a of lack the measures, industrialprotection chaotic criticized the establishing duties; o export export the for lower conventions demanded they (1935) activity institute’s the of beginning the At traders. the with dialogue of principals the shared Kalendj director economic Bulgaria”“powerful 1580K/1/22). (CPRO, Sofia a building for outlook optimistic an have and deliveries military providing now are interest the supports trade of organization existing presently 1940 year the For 1580K/1/21). Sofia (CPRO, well as year following the rewards such yield would work hard continuous that view optimistic an BNB, the EI, the sup full provided have which Railways, Trade, State Bulgarian Foreign of Ministry institutions, Bulgarian the to finally and producers Bulgarian the to also credit gives He countries”. rich and powerful amid country the of potential the of speaks export “which stated, he act,” heroic a victory, a is This risk. Bulgarianthe took and flexibility creativity, the of “character the to

At the time Bulgarian Railways did not have enough refrigerating wagons to sat to wagons refrigerating enough have not did Railways Bulgarian time the At By 1937 the Export Institute enjoyed good reputation among the exporters; its exporters; the among reputation good enjoyed Institute Export the 1937 By e big fre cara o te no o Blain Exporters, Bulgarian of Union the of chairman former a being iev

aias n ma, mrvd refrigeration improved meat, and animals f valued exchange rate of the lev. They were openly openly were They lev. the of rate exchange valued 4). Other lasting concerns remained the cost the remained concerns lasting Other 4). t as cmeiin rm te more other from competition harsh st - rdr wo eosrtd courage, demonstrated who trader, port and patronage. He relays He patronage. and port

- s of the exporters who exporters the of s 1 e eot ta the that reports he 41 isfy the needs of of needs the isfy 48 they , 136

CEU eTD Collection favo BNB the which be difference the was 49 who Yugoslavia and Hungary in activities competitors’ their of informed well were They open. more was market German the when year previous the in case the been had balanced bila and Germany from imports increased for demand the with BNB the to expressed the of devaluation future were rules trade a foreign German changing the about uncertainty the and about reichsmark Fears Reichsbank. the at assets of volume Bulgarian be increasing the Germany was barriers to such main respect the of with One abolished. barriers bureaucratic all that demanded market German the of dominance the accepting while grapes of exporters The exchange. not should abroad travel business their that clearingwithin agreement ( the set was payment The machines. sealing and jars glass tin, caps, metal for exchange agreements. clearing the by in purée tomato exporting factories restrictedcanning the are deals compensation of Examples not deals compensation private more They results. financial the about speculate than rather know they that so rules clear for were demands Their revenues. export their calculate to exporters the for difficult it made regulations rate exchange unclear and premiums unstable premiums

At the domestic market for foreign currency, administered by the BNB, foreign currency premium premium currency foreign BNB, the by administered currency, foreign for market domestic the At tled through exchange of letters of credit between the BNB and the Reichsbank the and BNB the between credit of letters of exchange through tled r of exporters thus undervaluing the lev against hard currency. currency. hard lev against the undervaluing thus exporters of r

n iw f h iprac o cmeca cnat te xotr as insisted also exporters the contacts commercial of importance the of view In currency foreign and deals compensation exporters the to According In 1937 exporters of fruits and vegetables asked to be paid for immediately as as immediately for paid be to asked vegetables and fruits of exporters 1937 In ee rne seil rfrnil ramn i cran xot tm and items export certain in treatment preferential special granted were 49

ee h mi mtos f nraig h prices the increasing of methods main the were teral trade.teral e facto de tween the nominal ex nominal the tween

purchased foreign exchange from exporters. exporters. from exchange foreign purchased

CPRO, Sofia CPRO, 512/1 change rate of foreign currency foreign of rate change Central EuropeanUniversity,Budapest e iie b dnig hm foreign them denying by limited be

/19).

This premium was always in in always was premium This

and the exchange rate at at rate exchange the and

f xot bt the but exports of

also asked for for asked also Vera Asenova

blocked 137

CEU eTD Collection 1988) (Grenzebach, zinc. and copper Yugoslavia of case the in valuable, was what more import need not did it if even c each in products main the of amounts big purchase to was strategy German The Yugoslavia. 50 “fusion shouldnotand confusedwith be corporatism”. merged, resources uniquely interdependent how and concentrated emphasize “to fusion term the uses 1985 Bunce, (Ibid.). fused” and interdependent were resources and roles arenas, social and economic negoti economic international of agenda the shape and arenas interest national social the define and to sector private economic the enabled political the of separation the addition In 1985:5). state “some socialist practice, the of in demonstrated case monopoly discussed the in implies the Corporatism 1947. after from established different qualitatively is 1930’s the Fanto Deutsche enterprise whichGesellschaft re German monopoly the from oil importing in difficulties the detailing Religion and Affairs Foreign of Ministry the Ban Cooperative and Agricultural Bulgarian the from letter secret A expensive. demanded sector byrepresentative. its nothi was demands these goods same the of export smaller much Bulgarian the fortreatment same the negotiates government Bulgaria the that demand respectively

hy ut seiial lr ad p and lard specifically quote They Despite the state monopoly over foreign trade, the state corporatist regime of regime corporatist state the trade, foreign over monopoly state the Despite and infrequent became Germany from deliveries war the of beginning the After separation of arenas and a state that has some autonomy” Bunce, autonomy” some has that state a and arenas of separation

them in order to gain a leading position a position leading a gain to order in them

- exported Romanian Romanian Bulgaria exported a oil to high for commission. ng short of the desired paternalistic steering of the export the of steering paternalistic desired the of short ng

tos I te tlns pltcl cnm te “political the economy political Stalinist the In ations. runes wih ee h mi arclua epr ies from items export agricultural main the were which ,

r i a tlns pltcl economy”… political Stalinist a in are s a buyer and then at a later point to to point later a at then and buyer a s

50 . h Bn’ rsos to response Bank’s The - Mineraloel - Industrie ountry

to k 138

CEU eTD Collection partner. trading preferred most its not was Germany hence and one preferred most Bulgaria’s not was payment of way clearing The Germany. state, core the in than greate enjoyed Bulgaria in associations and actors private Actually one. totalitarian a being state the without achieved was This negotiations. international in agent domestic a as acting and representation interests’ of system a organizing domest its diminish not did domestic Germany to authority various external up giving for possibility the provide Bulgaria’s subordination. international and of position the utilize or resist to arrangements resource best own its still o institutions domestic the However, it. with complied state small the which to degree the and state core the by promoted regime trade international th of context the in conditions.international necessary as and circumstances the of view in legitimate as interest as seen economic was economy the over national control its Thus the organizations. these by of expressed defender a as acted and representation inst the organized and created also but organizations, private ofdomestic interests.promoter a as acted state small the activity economic domestic of spheres more and more authority extending and state dominant the to authority this up giving In of state. process core the with cooperation economic for condition necessary a was economy its over monopoly state’s small the where regime payments and trade the wa It type. corporatist state hierarchical a of institutions domestic centralized more promoted Bulgaria and Germany between integration Economic Conclusion The relationship between external and internal authority was determined by the by determined was authority internal and external between relationship The of activities economic foreign the in role leading a took only not state The

Central EuropeanUniversity,Budapest ttos f interests’ of itutions f the small state are state small the f s achieved through achieved s ic capacity for for capacity ic Vera Asenova freedom r over 139 e

CEU eTD Collection relations and negotiations. explainsThe followinghow chapter this was achieved. economic international of level the on allowed was authority relative but Moscow, depende highly were politics internal period Soviet early the In politics. internal its in located was authority this 1930’s the In assumed. usually is it than autonomy of level higher had Bulgaria that argues whole a as thesis The languages. different marke in conducted was society and administration state government, between operandi the was different had periods two the However, Bulgaria. socialist in exist to monopoly which trade, international over monopoly state introduced It socialist quick reorientation a systeminternational toward economy.for the of political inst constant potentially of area an offer but arrangements international by prescribed fully not are however adjustment internal of varieties The institutions. and policies domestic their vulnerable, and underdeveloped however states, small the that demonstrates This Depression. Great the of out way efficient an found and situation its of most the made it model foreign exploited. or coerced was coo Bulgaria Through that mean not does this However, regime. tradeinternational the of rules the set to position a in certainly and available one only Grea currency hard a to sell rather much would Exporters t Britain. Even though Germany was not the most preferred partner, it was the was it partner, preferred most the not was Germany though Even Britain. t The German trade regime might be seen as providing the necessary institutions necessary providingthe as seen be might regime trade German The

dfeet raiainl rnil ad eiiiig oi. Communication logic. legitimizing and principle organizational different , itutional change.itutional eain n ajsig t dmsi isiuin rte ta iiaig a imitating than rather institutions domestic its adjusting and peration

have more choices than it is usually assumed, located primarily in in primarily located assumed, usually is it than choices more have

- aig rd prnr uh as such partner trade paying is state first modus nt on nt 140

dly

CEU eTD Collection olciiain a as so wt ol aot pr et f rbe ad being land arable of cent D per 3 6 about only on with slow adopted also was was collectivization Bulgaria of the of Republic constitution new the People’s until years three least at took establishment official d’état the marks end of the studied period. for ruble convertible 1956 year the Therefore a discussions. official into way its made payments multilateral introducing for proposals and revision under came also the for agenda th level new CMEA the At country. the of a development socialist set 1956 in Party Communist Bulgarian the of Congress Communist moderate the with replaced was leader type Stalinist the of cult and Hungary in personality The dramatic. less were revolutionsevents Bulgaria In region. the across and Poland in resulted which state, dominant the of hegemony in death Stalin’s Europe. Eastern and Central of republics democratic the and Moscow between drift important operation. its of years seven first the and 1949 in CMEA Soviet the to Bulgaria in capital German of transfer the analyses It Bulgaria.in change domestic Soviet to sector trade Germany from transition of process the presents chapter This Chapter 5: The Transition The 5: Chapter Hierarchy Soviet to German from

y ugra Cmuit eitne oeet akd y h Rd ry its Army, Red the by backed movement resistance Communist Bulgarian by Although Communist rule in rule Communist Although

no a te n o te eod ol Wr te salsmn o the of establishment the War, World Second the of end the at Union - Union

93 fee a opruiy o oel calnig the challenging openly for opportunity an offered 1953 - oiae frin rd sco truh h ln of lens the through sector trade foreign dominated -

1944 Bulgaria began with the 9 September 1944 1944 September 9 the with began Bulgaria lko Chervenkov, was denounced in 1954 and he and 1954 in denounced was Chervenkov, lko

- 1956 Central EuropeanUniversity,Budapest -

oo Zikv Te so The Zhivkov. Todor

e bilateral clearing system system clearing bilateral e The year 1956 marks an marks 1956 year The cme 14. Land 1947. ecember - oiae foreign dominated Vera Asenova - ald April called coup 141

CEU eTD Collection Sciences. of Academy Bulgarian Sociology, Institute of C 51 authoritarian the of legitimacy The different. very were legitimacy of mechanisms bo that true is It party. the to loyal bureaucrats with them replaced and Bank National Bulgarian the and institutions key the from professionals trade foreign the removed It one. Soviet the over control latter, the served economy In imagination. political the dominated nationalism economic when time a in legitimate as manager trade foreign a of role its considered t period Communist the difference in control state and qualitative thirties the in a control state between conceals however, metaphor, This War. World Second the before already Communism” with “pregnant was Bulgaria that 2006) (Avramov, the and theColdWar early of years War. World Second the Depression, Great the to reaction in policies state of result a as transi This Europe. Eastern in Socialism to Capitalism from period transition a as interpreted theinterwarbe of can thesecond ideologicalhalf period and Thus monopoly. political State 503). 2: vol. 1986, Radice, and (Kaser 1944 September in coup Communist the after change important most biggest the earliest, the was trade international over control private all weredeposits nationalized 1951. Large in and sector banking The 1949. in cent per 12 and 1947 in nationalized e omr h sae ce a a aet f oetc neet rus n they and groups interest domestic of agent an as acted state the former he neto o hw ugra ‘Beg Bulgaria how or onception For the main counterhypothesis of this narratine see Ivanov, Ivanov, see narratine this of counterhypothesis main the For oooy a etbihd vr cnmc ntttos el n dac o the of advance in well institutions economic over established was monopoly hr i a oua mtpo i te ugra eooi histo economic Bulgarian the in metaphor popular a is There economy, planned Communist the for crucial reforms, domestic these Unlike tion was not a process with a determined outcome but happened graduallyhappened but outcome determined a with process a not wastion h eid wr dfnd y tt cnrl bt hi ntr and nature their but control, state by defined were periods th the interests of the Communist party, often not the Bulgarian but thebut the Bulgarian not often party,Communist the of interests the

t ih Communism’ with et

- scalenationalization in 1 advanced

. oilgcl Problems Sociological Martin. Martin. 2007 3 , - : 303 4: . The Miracle Miracle The y literature ry - 337 Sofia: Sofia: 337 950 51 - 142 . In . 53. of of

CEU eTD Collection important has and Bulgaria for gains economic expected the with legitimized was authority German This establishe hierarchy War. of World kind Second the the for implications of victor a as Army’s westward Red the march during gun a of barrel the at established was hegemony Soviet control state over international trade increased even further. result a as and shortage product and monetary about brought War World Second the of end the Depression, Great the of shocks the to Similarly survival. of heavily matter and items, export of c of times in trade international maintaining number markets, foreign on dependent small a with backward, technologically resources, natural with endowed poorly periods. was which economy, two Bulgarian agricultural the in similar were conditions economic external however, Bulgaria, For Bulgaria. with method trade main the as clearing 1929 in economic global One Chapter in presented As Transfer5.1. ofthe German Assets toSoviet Possession chapter.this in analyzed are changes institutional domestic it with related the and power hegemonic of source main its The wasauthority. borders its outside power political of center a to service and goal political supranational a to devotion its on rested state communist the of represen a as seen was agent economic an as state the and character nationalist pronounced its on rested regime While German author While

–

1933 and 1933

continuity of bilater of continuity

for the Soviet Union Soviet the for ity in the interwar period was based on economic strength, economic on based was interwar period the ityin tative of domestic economic interests. The legitimacy The interests. economic domestic of tative al clearing regime in Bulgaria across the change of of change the across Bulgaria in regime clearing al in 1944 1944 in Central EuropeanUniversity,Budapest

conditions were different for Germany for different were conditions –

1949, when they adopted bilateral adopted they when 1949, d. For the period before WWII WWII before period the For d.

For the small primarily primarily small the For

Vera Asenova risis was a was risis 143

CEU eTD Collection than less nothing as seen (Ibid.). is wholehearted it sure make should it that and Germans the in hesitation of impression Berlin in ambassador Bulgarian the time same the At K/21/2614/6). 176 F Sofia. (CPRO, government Russian w threat. military direct a to response a than rather negotiations tactful and prolonged of result a and was participation Bulgaria’s occupation between choose Axis. to had the Bulgaria with that alliance and Romania with borther northern the from country the invade to threatened Germany that is textbooks history Bulgarian in explanation accepted 52 assets German all of management the for 1944 in established Commission, Control finan state and resources economic firstand offered rewardscooperationlater. for th while stick a with empire its established exploitation, economic actual and occupation military of the using threat before cooperation economic beneficial of carrot the offered Germany stick” and “carrot the Using 1984:10). (Bunce, authority” to power from w it or Khrushchev under power softer relative to Stalin under is stillto this unconfirmed day. which 1943, in orders Hitler’s at poisoned was III Boris King that hypothesis the and coercion military of threat a including power hard to evolved authority its 1939 after schools” primary in Ivanov, investment and Germany2011:48). soft(Tooze power interwar relied on but inthe period over priority take should service debt that insist revenues tax Sofia’s hostage hold not did “demand accounts… notfiscal Bulgaria’s to did access it Nations, of League the and France Britain, as such creditors unlike administration; Bulgarian the in figures economy key the Bulgarian appoint not the did government over control direct from restrained rule a as Germany renegotiated. and challenged was it met, not were expectations when as instructed in a coded telegram by the Foreign Ministry to give this threat this give to Ministry Foreign the by telegram coded a in instructed as There are different explanations of how of explanations different are There Soviet dominance on the contrary can be seen as moving from hard power power hard from moving as seen be can contrary the on dominance Soviet Soviet occupation meant immediate and direct control over economic resources economic over control direct and immediate meant occupation Soviet –

Draganov, warned the Bulgarian government that government Bulgarian the warned Draganov, e. hs a iiily anand hog te on Bulgarian joint the through maintained initially was This ces.

After joining the Axis powers, the Bulgarian ambassador in Moscow in ambassador Bulgarian the powers, Axis the joining After

ned ugra joi Bulgaria Indeed

–

and why Bulgaria why and

ned when German troops were already in Romania but but Romania in already were troops German when ned by placing its army in the country and extracting and country the in army its placing by

joined the Axis powers Axis the joined its joining the Axis should not create an an create not should Axis the joining its as undergoing a “shift a undergoing as - based explanation to the to explanation based

Te German The . . The most widely widely most The . parlance USSR e –

- Antonov Antonov Soviet 144 or 52 :

CEU eTD Collection of pioneer the between buffer a provided effectively This (Ibid.). states sovereign formally them keep to but Republics Soviet into Europe Central East in countries the of borders the into or Union Soviet Blocneighboring Eastern countries. the into territories their of parts including by countries Axis former the punishing and (Ibid.); 1945 after retain to allowed was and patronage” German of of result a exception as “gained the Bulgaria which (with Dobrudja, southern hegemony German under made changes boundary the Hitler the under territory all of Union Soviet reintegr and “reoccupying” by established formally were boundaries follows: 1945 in bloc” “Eastern the of establishment the to prior rhetoric such War no had Union World Soviet the 1937), Second (Schacht, the before still and 1919 in already economy industrial its to rights Europe Eastern a overimperial the of region claimed openly Germany westward.While march victorious and defensive a of rather political loyalty,primacy of the on built was authority Soviet attractiveness, economic on rested which authority, authority of nature the in difference another to points This trust. direct was which Bulgaria, of government Communist the through exercised was control on Later Bulgaria. in formallyestablished (Janos,2000:232). traditional of functions Ordnungsmacht the perform to Union Soviet the invited virtually Germany but expansion motivated and planned a of result a not was empire Soviet The Another attestation of the primacy of security was t was security of primacy the of attestation Another h rgo hd piaiy euiy motne o Sai. is is territorial its First Stalin. for importance security primarily a had region The

of defeat the of wake the in up opened had that vacuum political The

in East Central Europe even before its hegemony in the area was area the in hegemony its before even Europe Central East in which was withwhich theuse established of force. ly appointed by Stalin and excluded cadres he could not could he cadres excluded and Stalin by appointed ly –

1948. Janos, 2000 sees the r the sees 2000 Janos, 1948.

Central EuropeanUniversity,Budapest - Stalin pact of 1939 (Ibid, 233); nullifying 233); (Ibid, 1939 of pact Stalin s a necessarys a hinterland economic he decision not to transform to not decision he ise of the Soviet Union as Union Soviet the of ise -

nie German unlike tn it the into ating Vera Asenova

145

CEU eTD Collection push further Yugoslavia. in Germans the fighting in 53 and Trade of Ministry the at office executive an through government Bulgarian the of managemen the under and Union Soviet the of ownership the in Bulgaria in assets and Friendship Mutual for Agreement was signed.Cooperation the when 1948 until Union Soviet the of Germany against months eight for fought having Despite 2002). (Nikova, property Soviet became ships biggest three the like items German in shares property, Germa immobile All 1946. after ownership their assumed trophies, war as them treated which government, Soviet the but Bulgaria in assets German and similar a commission. of deposits including assets foreign p were Germany East in entities foreign of all claims outstanding 1945 East September including 20 countries On European Germany. East all in established were Commissions asset German the of by settled means be to were Union Soviet the to reparations German the Powers Great the by signed agreement Potsdam 1945 the to According Germany. from reparations in The 1949. than earlier no formalized was regime hegemonic new the of component economic aGermany kind of into security theSoviet periphery of Union. fo the transforming countries capitalist the and socialism

Between September 1944 and April 1945 Bulgarian troops troops Bulgarian 1945 April and 1944 September Between

the German Army Army German the cnmc nerto wt te hr Rih et cnieal aon of amount considerable a left Reich Third the with integration Economic the and second came considerations economic decisions these all Throughout h pae gemn wt Blai o 2 Otbr 94 lcd l German all placed 1944 October 28 of Bulgaria with agreement peace The west into Hungary and eventually eventually and Hungary into west itial economic acquisitions for the Soviet Union came in the form of war of form the in came Union Soviet the for acquisitions economic itial

back (Dimitrov, 1994) back

i Esen uoe Nkv, 9649. Control 1996:419). (Nikova, Europe Eastern in s The First First The reached .

- ugra etrrss ee sm Bulgarian some even enterprises, Bulgarian

Bulgarian Bulgarian the Austrian city city Austrian the 53 , Bulgaria was seen as an e an as seen was Bulgaria , Ar of my

455 000 soldiers soldiers 000 455

of of of of rmer economic periphery of of periphery economic rmer about 130 000 troops marched marched troops 000 130 about Klagenfurt Klagenfurt laced under the control the under laced

ast, oie and mobile assets, n aiding the Soviets to Soviets the aiding joined the R the joined ed Army Army ed nemy 146 t

CEU eTD Collection which 54 1946. and 1944 between enterprises th by incurred damages the for USSR the compensate to liable Bulgaria made and ownership Soviet under Bulgaria in entities corporate and private German of shares and concessions patents, marks, trade assets, immobile and mobile all (Zlatev, enterprises 1987:134). banks industry respectivelyamong divided prices prewa in levs million 187 1 been have to estimated was 1946 in Bulgaria in capital German sectors. construction German and shipbuilding the percent in industry, extraction 100 Bulgarian almost cases some in and shares, than (more investments German biggest The Czechoslovakia. and Poland in especially countries, European Central in investments German than value absolute in smaller were however, Bulgaria, in investments capital German trilat under enterprises Dutch and Belgian against those clearing including the claims, Bulgarian of all canceled possession unilaterally in documentation, was which Bank, Deutsche 1996:422). (Nikova, 155,5 009 732 or since 1932 agreements clearing the under claims Bulgarian in accumulated citizens All German Bulgaria. of assets financial and estates real the factories; textile and insur and metal trade foreign of shares German the shipbuilding,metals; ferrous of extraction and processing as such enterprises strategic most included These Industry.

Af e dcaig a o te S ad ra Bian Bulgaria Britain, Great and USA the on war declaring ter ne opne, ak, osrcin opne, hmcl food chemical, companies, construction banks, companies, ance On 31 May 1946 the Bulgarian General Assembly ado Assembly General Bulgarian the 1946 May 31 On damaged many enterprises. During the whole period of the war industrial production in the the in production industrial war the of period whole the During enterprises. many damaged -

3 mlin es n salr hrs n nuac, rnprain n other and transportation insurance, in shares smaller and levs million 235

rihmrs ee lo rnfre t Sve ownership Soviet to transferred also were reichsmarks 9

– hs rprto pyet ae ad to hard are payments reparation These Central EuropeanUniversity,Budapest rl laig gemns ih Germany. with agreements clearing eral

640 million levs; trade trade levs; million 640

ufrd Anglo suffered pted a law, which placed which law, a pted - we) ee n the in were owned)

0 ecn o the of percent 50 - mrcn i strikes air American -

201 million levs; million 201 Vera Asenova - processing German e 147 r ,

CEU eTD Collection was decline The 2007:36). (Zlatev, 1944 alone. strikes air by not caused in 42.4 to 1939 in 100 of index an from decreased country German one of capital the with established was which Bulgaria, in activity mining all undertaking “Gorubso” “Neptun”; and “Koralovag” shipyards German the included Bulgarian four into transformed were ones strategic most and biggest the while enterprises commercialrecordstheir knew and to access full had Bulgaria in mission Soviet the the while country the sure in stayed made assets government the that meant only however Control period. interim tran eventually were German The Bulgaria. of partner economic biggest the USSR the made transformation This 1987:420). (Zlatev, Sofia in representation commercial Commi Bulgarian 159 of establishment the with 1948 and 1946 between completed was Union Soviet the to property German of tr railway local the of needs the for government Bulgarian the by bought 1946 in and railwaycompany German the thiswas payment on to reduced Later 1987:137). (Zlatev, Union Soviet the to paid government Bulgarian the 000, which 000 9 USD of transfer a through settled be to were citizens and enterprises Soviet the of refinancing i as investments served payments these way a In rates. exchange different under calculated were or kind in occurred them of many because calculate ansport for 1 977 200 000 levs (Isusov, D., Z. Zlatev, eds. 1982: 217). The transfer The 217). 1982: eds. Zlatev, Z. D., (Isusov, levs 000 200 977 1 for ansport German railway engines and wagons which Bulgaria rented in 1941 in rented Bulgaria which wagons and engines railway German fe 14 te oit no satd eln t Blai te es profitable less the Bulgaria to selling started Union Soviet the 1949 After so fr h Mngmn o te oit ses n ugra t h Soviet the at Bulgaria in assets Soviet the of Management the for ssion - oit opne “as” o ar travel air for “Tabso” companies Soviet Blai (ioa 19: 2) Ottnig amns o German to payments Outstanding 423). 1996: (Nikova, Bulgaria n

fre udr h cnrl f h Blain oenet n the in government Bulgarian the of control the under sferred

–

Reichsbahn USD 4 500 000.

- whichenterprises werewhich and not. profitable Soviet enterprises, under the control of a special a of control the under enterprises, Soviet

, were confiscated as Soviet war trophies war Soviet as confiscated were,

“obo fr hpulig which shipbuilding, for “Korbso” ;

- Bulgarian enterprises Bulgarian - 1943 from 1943

148

CEU eTD Collection 1919:172). (Mises, society» of ownership the into individuals of ownership 55 trade foreign for extent. to regime a greater much preferences state’s small the reflects also but periods postwar sh only not sector trade foreign the industry, bloc the of power central the by provided was output industrial the for demand the and materials raw of supply the while state socialist state hierarchy economic international of structure new the In class. political newly established the of interests the with line in fully was ownership state however, transfer internal an internat in rather but revolution democratic in found be to not are Bulgaria in origins its production, of ownership state with associated is socialism as much As Union. Soviet the to assets valuable toas natio can state beBulgarian seen forced experts German the The control. and ownership Soviet as direct through but period interwar the in transfer operated knowledge or practices or emulation through the between two to was countries an end. brought state fully became companies joint all ten these a over Union Soviet the to deliveries of kind in for shares Soviet the 1955 and e in Bulgaria wereto levsmillion 270 sold almost at enterprises shareholding 1954 in on Later 1996:423). (Nikova, companies construction German four of capital the on based was which projects, indu of construction for “Sovbolstroi” and company mining

For example Mises defines socia defines Mises example For - h fudtos f Soviet of foundations The

e idsraiain a t be to was industrialization led

lism as «the transfer of the means of production out of the private private the of out production of means the of transfer «the as lism

- tl state style oe h piay cnmc ciiy f h new the of activity economic primary the come - owned and this form of economic cooperation economic of form this and owned ional political intervention political ional Central EuropeanUniversity,Budapest ows continuity between the interwar and interwar the between continuity ows - we idsraiain ee ad not laid were industrialization owned nalize its industry in order to transfer its transfer nalizeindustry orderto itsin

- year period (Ibid. 422). With this With 422). (Ibid. period year –

h Sve Uin Unlike Union. Soviet the til n transportation and strial

55 . After the initial the After . Vera Asenova xchange 149

CEU eTD Collection at Product National Gross T (2000). Rangelova in cited and produ national the for data and editions various Bulgaria, of Yearbooks 56 M High Commission. Soviet Military the by the managed was of but governments representatives Soviet and included British American, commission This Commission. Control Allied the by established were economy Bulgarian the over control direct of organs and count occupied a of status the received it 28.10.1944, Moscow in signed truce, the the In years 1944 Union. Soviet the by occupation economic of beginning the and Germany (Rangelova,2000). exports” Bulgarian of percent 97 and imports Bulgarian it of percent 85 Romania, for accounted “with Together Union. Soviet the with predominantly was trade year 7.5 19 and 1942 to in percent 24 decreased (from GDP 1945 of percent in trade Foreign 2002). (Nikova, partners trading major its from isolation economic in itself found Bulgaria result a as and Kingdom Croat wi relations diplomatic ended Georgiev, Kimon by led Front, Fatherland the of Germany government new The Italy. with with after soon and immediately relations diplomatic terminated Bulgaria territory. its entered and and year previous the from volume in considerably declined it However exports). its of percent 89 and imports Bulgaria's of percent 71.3 or trade foreign total the of percent had Germany 1944 September Until From5.2. Foreign TradeIsolation to ForeignTrade Reorientation

Author’s calculations of trade openness are based on trade statistics available from Statistical Statistical from available statistics trade on based are openness trade of calculations Author’s was on terminated Septemberwhen th 5 o Blai te n o te eod ol Wr en te end the meant War World Second the of end the Bulgaria For - 1948 1948 anBulgaria wasas theSovietUnion. enemy treated of toAccording

current prices for each year. each for prices current jr losy a obn braca, a i cag o the of charge in was bureaucrat, Gosbank a Ilvovsky, ajor

he formula used is (M+X is used formula he

sbtnil hr o Blain rd ( trade Bulgarian of share substantial a e Soviet Union war SovietUnion declared Bulgariae on

)/GNP )/GNP

percent in 1939). in percent –

h ugr, lvka n the and Slovakia Hungary, th Imports plus Exports divided by the the by divided Exports plus Imports ct provided by Chakaloff (1946) Chakaloff by provided ct 56

The following The f rd with trade of

150 80 ry

CEU eTD Collection the of size the in with decrease the 1946 57 clearing bilateral big first the was agreement This deliveries. Soviet with 1946 an have to agreed Bulgaria and Bulgaria to quantities and materials requested the of all export to able not was Union Soviet the war, the during devastation economic own its to Due level. state Mos in signed was agreement trade bilateral first The exchange. bilateral negotiate to order in Moscow to sent was representative trade first the signed was treaty peace the After 1944. in supplyBulgaria. short in were which metals and cotton fuel, of export counter a against tobacco and wine grapes, as such products Bulgarian of USSR the to export arrange to effort an in Stalin approached Dimitrov Georgi Union, Soviet the with agreement the to them without Gosbank exchanging present and levs Bulgarian for them exchange population, the from to ordered was Bulgaria expenses. Union Soviet the the in reform currency authorized finance of minister the BNB; the at opened wasagreement” truce the from arising “Expenses called account special A as war, the during destroyed were inwhich Sofia, legation and church Russian the of reconstruction the fleet; sea Black the and front Ukrainian Third the of expenses the territory; its on stationed Army, Soviet (Nikova, the trade foreign the and Bulga agreement same the Under 2002:123). Bank Cooperative and Agricultural Bulgarian BNB, the of assets the controlled directly and Commission the at section economic

The monthly costs in 1945 reached about one fifth of the monthly state budget and decreases in in decreases and budget state monthly the of fifth one about reached 1945 in costs monthly The led i te einn o Otbr 94 bfr te inn o te peace the of signing the before 1944, October of beginning the in Already

mrec dlvre fo te oit no wr scrd y h ed of end the by secured were Union Soviet the from deliveries Emergency o 1 Mrh 95 fe mnh o ngtain a te highest the at negotiations of months after 1945 March 14 cow

export surplus in 1945, to be balanced in the first half of half first the in balanced be to 1945, in surplus export them Red Army on Bulg on Army Red

for for the the equivalentvalue Central EuropeanUniversity,Budapest ria was obliged to cover all expenses of expenses coverall to obliged was ria

well as the rebuilding of Sevastopol. of rebuilding the as well arian territory arian of

(Nikova, 2002). (Nikova,

the new currency.

olc all collect 57

uig h 1947 the During Vera Asenova

gold

rubles

151

CEU eTD Collection to Bulgaria from prices export of index the and 1945 in base percent 100 a at 1946 t from prices import indexof total The 1986:47). (Zlatev, higher percent 75 ore copper of percent 54 pulp fruit of 1945; in than in 1946 higher percent 91 was tobacco of that prices, export Bulgarian the increase to settled were payments credit and clearing and approval with met were demands Bulgarian The industrialization. of goal the machines industrial and country the import equip main metals; were Bulgaria The of needs goods. respective the for prices world the closely follow would contracts clearing the in prices the and currency convertible with paid were Union d US in settled were accounts clearing the that insisted It delegation. Bulgarian the for successful very as seen be shor three a than more no in delivered were 1945 in contracted goods The 33). (Ibid. levs 000 600 788 was balance active its 1947 by and levs 000 000 exp 500 by Union Soviet the Soviet to export Bulgarian exceeded 1946Bulgaria of end the by Already 1986:30). (Zlatev, gold or currency convertible in settlement a for provided agreement formal the when even goods, with periodically settled or year next the to transferred was difference the balanced not – towardSoviet the Union and republics. people’s foreign of reorientation total andquick a of beginning the wasIt after WWII. countries two the between agreement

goods were exchanged against equal in quantity and value goods. value W and quantityin equal againstexchangedwere goods tages and and industrial capacitiestages diminished thetwo in economies. The negotiations took place in Moscow over more than three months and can and months three than more over Moscow in place took negotiations The agreements of type clearing were one initial the following agreements trade All rd o Blai fo te etr cptls countries capitalist western the from Bulgaria of trade ollars; that some of the Bulgarian exports to the Soviet the to exports Bulgarian the of some that ollars; - ment for the electrification and the railroads of railroads the and electrification the for ment

all capital investments were directed towards directed were investments capital all in US dollars. An agreement was reached was agreement An dollars. US in - year period due to the severe postwar severe the to due period year he Soviet Union was 98.08 percent inpercent 98.08 was Union Soviet he

hen trade washen trade r to ort 152

CEU eTD Collection ucae poesn ad xot f oac ad oac products; tobacco and minerals; tobacco of export the for of “Rudexport” oil; rose export of export for “Bulgarroseexport” and processing purchase, and fruits processed v and fresh of export the for “Bulgarplodexport” were These Most control. state state under trade foreign put which measures, of series a Council adopted the 1947 March In republics. people’s other the and USSR the with signed were assistance mutual and cooperation friendship, for agreements 1948 and 1947 In increased. partners trading Bulgaria’s among countries capitalist were goods of variety greater markets, more to expanded importand exportlicense (Nikova,for for 290 2002). Cooper and Hranoiznos Bank, Cooperative and Agricultural Bulgarian Petrol, for Central Import the Industry, Bulgarian Trade, Bulgarian Central, Import Bulgarian like enterprises Mini the in trade foreign of Directorate 2002). (Nikova, direction and structure its on decided and activity import and export undertake could that enterprises the approved trade ne the Moscow, to of Bulgariagovernment managed to improve economicimmediate its condition. loyalty political granting While signed. were agreements small other many countries two the between agreement trade general the Alongside economy.Bulgarian the fordisadvantageous were prices the 1945 that it of improvement this reached delegation Bulgarian The (Ibid.). 1946 in level 1945 its of percent 142 respectively was Union Soviet the gtbe ad prt; “Bulgartabak” spirits; and egetables - ih h Pae ray sge 1 Fbur 14, ugras oeg trade foreign Bulgaria’s 1947, February 10 signed Treaty, Peace the With of ministry the regime; license strict a with regulated became trade Foreign we etrrss eln wt frin rd wr cetd t h sm time. same the at created were trade foreign with dealing enterprises owned stry of Foreign Trade and Supplies brought under its control the foreign trade foreign the control its under brought Supplies and Trade Foreign of stry ation United Centrals. Until 1947 353 private enterprises were granted a granted were enterprises private 353 1947 Until Centrals. United ation -

h mnpl etrrs fr h production, the for enterprise monopoly the Central EuropeanUniversity,Budapest s terms of trade on the grounds the on trade of terms s

imported and the share of share the and imported w communist communist w Vera Asenova

f Ministers of

153

CEU eTD Collection credit All dollar. per rubles 5.30 of rate a at dollar the replaces and 1950 February, ideologicalmanifestation of conviction. a than rather change to adjustment of result a was it that shows which (Ibid.), law special a of means by Union Soviet the in like not laws, separate of series a through c change institutional this period interwar the to Similarly sector. financial the and agriculture of nationalization the of advance in well trade international of most nationalized practically state The (Ibid.133). Foodstuffs and internally distributed further were goods imported The (Ibid.). “Metalimport” monopolies import the through compulsory machines and metals for ordersimport all made 1947 July26 on adopted Ministers Council of the of ordinance relatio the and markets international and domestic the on prices the setting administratively the for tool the was This prices.” of equalizing rawimported materials. state the supplied and sector import the of share bigger the state property stillbecame private In had companies 1947 by2002:132). (Nikova, law was trade sector monopoly respective the to belonging warehouses and factories practice All company. in but enterprises three leath and eggsof export The these hands. their in concentrated to monopoly a and grant not “Bulgarindustrialexport” did law The sectors. respective the in exporters private “Bulgarplodexport”, the and Union Cooperative in bu state the by shares held were “Industrialimport” of majority The products. designated their with trade over rights monopoly exclusive had They “Metalim and “Chimimport” n 8 ac 14 te oenet dpe a a fr h “ud o the for “Fund the for law a adopted government the 1947 March 28 On The ruble became the became ruble The

port” for the export of chemicals and metals respectively. metals and chemicals of export the for port” currency of international exchange with a decision of 18 of decision a with exchange international of currency

t other shareholders included the Central the included shareholders other t nship between them. Another them. between nship er was done by a monopoly a by done was er m aot incrementally about ame

- by the Ministry of Trade of Ministry the by ow ned enterprises with enterprises ned 154

CEU eTD Collection propagandaplanning themaincoordinated (Zlatev,Accordingofficial 1986:31). the to mutua mutual benefit, equality, of principles guiding the of propaganda political thick the amidst place took regime trade new this establishing of process The important. extremely positiv market. capitalist the a on played infrastructure, transport bad the despite competitive proximity, geographic Additionally, relatively were which goods, to Bulgarian West the by applied embargo economic the from importantly most conditions, USSR andthe *With listed.five countries Source: Table three than more took of quarters each country’s trade. bloc Eastern the of whole the and trade each of foreign share country’s large a comprised USSR the 14, table from evident As complete. trade the 1952 By 1986:131). (Zlatev, relations close these fostered also market capitalist the with exchange of decline the export and improved Unio Soviet the with trade foreign 1954 and 1949 between period whole the In rubles. in revaluated were payments

The trade reorientation toward the Soviet Union was not isolated from the the isolated wasfrom not SovietUnion reorientation trade toward the The rl i etnig rd rltos o h es. h pltcl oie were motives political The east. the to relations trade extending in role e 14 Bulgaria Romania Hungary Poland Czechoslovakia

Janos, Spulber, 1957,2000:235 from 410. TradePatterns of Five Central East European Countries, . Trade. PatternsEuropean of Five CentralCountries, 1937 East

l assistance, negotiations, specialization of production and exchange, and production of specialization negotiations, assistance, l

1937

– - import structure became more diversified. External factors like factors External diversified. more became structure import

1952(percentage of foreigntrade) With USSRWith 1937

1 1 1 - -

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eretto twrs h Sve Uin was Union Soviet the towards reorientation 57 58 29 32 35

Central EuropeanUniversity,Budapest With CMEAWith (Bloc) 1937* 12 18 13 11 7

1952 89 85 71 67 71

Vera Asenova -

1952 global 155

CEU eTD Collection Hungary of case the in personnel of continuity the attention my to brought He CEU. at Conference 58 to hard find. Trade of Ministry the to cell prison off from removed experts, Hungarian the of Many Bulgaria. in 2730 to Hungary in 300 around from considerably, varied courts People’s new the by issued sentences death of number diffe party administration level lower spare not did purges The treason. state of charges 2000 the makes following comparison: Janos, decisions. personnel over control strict exercised Union Soviet The The 5.2.1. change ofp personnel, andby assigning managers appointing policy objectives. from refrain not intervened but intervention did system socialist the fact In system. capitalist countries the big in the inherent by small the of exploitation stated the to opposed as countries capitalist its and making said the was competitor in market world socialist the between difference

I am thankful to Bela Greskovits for discussing this issue with me during the the during me with issue this discussing for Greskovits Bela to thankful am I rent countries in the region had a different degree of personnel cleansing. The cleansing. personnel of degree different a had region the in countries rent Te cul xctos hwvr wr i te ad o lcl fiil and officials local of hands the in were however, executions, actual The . On orders from Moscow many high level officials were sentenced to de to sentenced were officials level high many Moscow from orders On 2000:234). (Janos, II” War World during and before Germany of hegemony imperial more inchoate the including hegemonies, earlier and Soviet the between difference major So the with cleared be to had level Politburo the at appointments fis sceais ee pone ad imse drcl fo Mso ad all and Moscow from directly dismissed and appointed were secretaries [f]irst

who were dismissed simply for not being members of the Communist the of members being not for simply dismissed were who

ice initially, were later restored; some were brought directly from the from directly brought were some restored; later were initially, ice

o e h non the be to ersonnel ersonnel

in a different way, namely through direct control over the the over control direct through namely way, different a in

58 . In Bulgaria continuity of executive personnel is personnel executive of continuity Bulgaria In . - nevnin n h itra afis f partner of affairs internal the in intervention experts in experts viets. This was a a was This viets. 2011 2011

Annual Doctoral Doctoral Annual the the ath on ath state 156 -

CEU eTD Collection the wa from ministers all death to sentenced 59 trade. foreign of the in ministry working been had who experts some new a in way different by coordinated new institutions and organized be to had countries bloc Socialist the and Bulgaria between cooperation economic and trade regime domestic new this In democracy. people’s the in elites political the influencing and empowering of mechanism the was 1985 can be described It as: new the by can be se government applied terror the of degree The 2002:121). (Nikova, abroad remain to decided Warsaw and Bern Paris, Berlin, in representatives commercial the home, People’s the by Court guilty found state; the against crimes economic and political for governor time in Nazi beyond of Germany support acting of accused was management Its bank. central the to assigned Bulgaria repaid be to never o reichsmarks

The People's Court was esta was Court People's The industry. On the political side Stalinism involved the concentration of resources in resources of concentration the involved Stalinism side political the On industry. heavy into savings forced considerable of funneling the through and consumption a of collectivization Moscow. to allegiance on relied fact in economy political of model Stalinist The The fusion of the economic, political and social arenas as described by Bunce, Bunce, by described as arenas social and political economic, the of fusion The and obedient Sovietto wishes ( party the of reaches upper the in concentrateand powernew further orderallegiances the powerto structures, force a totalitariaofhands the 59 h bokd ecsak i te emn laig con (3 million (738 account clearing German the in reichsmarks blocked The

n eeue i ery 95 A te rset f iia ft uo returning upon fate similar of prospect the At 1945. early in executed and …state , r 2 430 051 million levs, Nikova, 2002) constituted a credit to Germany to credit a constituted 2002) Nikova, levs, million 051 430 2 r

minister of finance of minister wesi o te en o pouto, eta planning, central production, of means the of ownership

–

en as loyalty proportionate en to the Moscowto signal. aimed to it mntr ls wih h nw omns gvrmn of government Communist new the which loss monetary a

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the requirements of the clearing the of requirements the Bunce,1985:5). and prime minister prime and rtime cabinet. rtime –

n npriua ftoetandi Moscow in trained those of particular in and

were Central EuropeanUniversity,Budapest

soon restored to office in order to continue continue to order in office to restored soon

–

the New Foreign Ministryof Trade

Dobri Bozhilov was prosecuted prosecuted was Bozhilov Dobri

on January 1945 it found guilty and and guilty found it 1945 January on

agreements. Long Vera Asenova

157 -

CEU eTD Collection 61 60 Socialist years (“Forty learning and young general in were and before trade foreign with dealt had whom of few representatives, trade Bulgarian the to compared experience more considerably for commissioner tra deputy foreign the Mikoyan, Minister Trade Soviet delegates, Soviet the that writes 1949 and 1944 between Moscow in Bulgaria for representative trade high of memoirs of two a Bulgaria of Republic People’s the of trade socialist of anniversary fortieth the of occasion the on 1985 In period. interwar the in movement Communist Bulgarian the to loyalty proved had who activists, Communist young with replaced professionals old result a as and level highest the at discussed was cadres of upbringing” “political the of question The 7). K/9/7: 259 F Sofia, (CPRO, ministry pre the in experience and competence high to due positions administrative but party Communist the from excluded were executives some that fact the criticized It period. interwar the from professionals towards attitude radical permanently lead removed from but released later police, economic by questioned and 1944 of end the at arrested were Central Import the of council governing the of members the with activity. trade foreign in experience of lack their of regardless members party Communist with replaced were units administrative of heads and companies trade foreign of directors comple a export two additional enterprises“Raznoiznos”and

Translates as «food export». «food as Translates Trans rpr o te oni o te iity f oeg Tae n 99 hw the shows 1949 in Trade Foreign of Ministry the of Council the of report A lates « as The president of the Union of Bulgarian Exporters Bulgarian of Union the of president The te change of the foreign trade personnel. All previously employed experts employed previously All personnel. trade foreign the of change te e tpnv n te rd rpeettv i Bulgaria in representative trade the and Stepanov de any export». any ing thesector. in positions -

akn ofcasws ulse. n t oi Hristov Boris it In published. was officials ranking

Trade of the People’s Republic of Bulgaria, Memoirs”, Sofia, Memoirs”, Bulgaria, of Republic People’s the of Trade

and “Hranexport”and –

Hristo Yotsov, together together Yotsov, Hristo – 61

- eand their retained

– ate, had Zajtsev, volume book volume and required and

h foreign the

- 1945 were 158 -

CEU eTD Collection bevd pcaig a nt f h aporae id n drblt; chemicals durability; and kind appropriate the of not was packaging not observed; were specifications quality department, correct the to addressed not were or ship were Deliveries chaotic. ideological the the of frameworks new regime. with compliance in form and shape new its taking was trade international of sphere scien and faculty students, which during years few a took cadres 107 professiona of generation new (Ibid, academics” “young of consisted also faculty The enterprises. trade international the educate to order in University the economic faculty a of Sofia new“International discipline Trade” opened includingtrade and theenterprises coursesin1951 andministry language the of later comple administrators responsible the first At enterprises. trade foreign the manage to personnel qualified of need pressing the on memoir his capitali the from professionals old The trade. foreign socialist the over control take to cadres, 1952 trade appointment: Aleksiev Dobri 1986:11). - 0) Te rcs o etbihn ti fcly n is rdcin f qualified of production its and faculty this establishing of process The 108). Grigor Popisakov Popisakov Grigor ZhivkovZhivko necessa the the in neither myself found having I and sphere backgroundnor specializededucation. wasIt by learning doing 26).(Ibid., published was trade decision the international later days foreign of Ten minister deputy of trade. position the offered was I and Ganev Dimitar trade Part Communist the of Committee rhvl ouet as rva ta te raiain f rd ws ls to close was trade of organization the that reveal also documents Archival st period werest (Ibid., period gone” 48). Central the of general secretary the by summoned was I 1949 August In - 97 lo cnwegs h “hr ne o qaiid oeg trade foreign qualified of need “sharp the acknowledges also 1957

–

deputy minister of foreign trade in 1950 and minister of foreign minister and 1950 tradein of foreign deputyminister –

a professor of international trade and finance, comments in comments finance, and trade international of professor a –

dpt mnse o tae 1949 trade of minister deputy a ped in the wrong quantity, ordered items were missing were items ordered quantity, wrong the in ped y -

Georgy Chankov and the minister of foreign of minister the and Chankov Georgy Central EuropeanUniversity,Budapest

ted qualifying course at the at course qualifying ted y rprto and preparation ry - s o mngn the managing for ls 92 eal hs own his recalls 1952 tific research in the in research tific Vera Asenova

159

CEU eTD Collection prices low at sold were goods these Although market. socialist the on than prices lower received and competition tough faced goods Bulgarian the markets those on but grapes and tomatoes quality best the buying Germany West mark exchange free the to directed were goods were obviously and qualityhigher F of 445/87). Sofia, (CPRO, the that admitted claim Polish Trade of Ministry the to and report a produce in Bulgarian Warsaw The in quality apples. representatives exported bad the for the price lower handling a received for Bulgarplodexport costs their deducted enterprise result a As to. them ordered had trade foreign of ministry Polish the that was accepted were they why reason only the and Hungary or Switzerland from them bought they if than higher addition in was apples Bulgarian for price the Bulgaria; Poland. to apples of export the is example One transportation. during goods the preserve to unfit were they all of most but Bulgaria, name the carrying not personnel, unqualified last constructed were (CPRO, crates wooden 1948 country In 356/1/119/86). F the Sofia, of language the in written be should countries capitalist the The to documents that ordinance an issue to Trade of Ministry 202). the caused which country, (Ibid.: difficult very t of language market the in translated always not was domestic documentation the at pricing correct their made which invoices, without sent were goods Additionally, 445/1/73/214). F Sofia, of not were Union Soviet the from imported The Polish foreign trade enterprise complained of the bad qua bad the of complained enterprise trade foreign Polish The hs a n acdn bt h sadr patc bcue h hget quality highest the because practice standard the but accident no was This

s were justified and that Romanian apples were better packed “like eggs” “like packed better were Romanianapples that and justified were s h epce cnetain (CPRO, concentration expected the t ih wdn Asra England, Austria, Sweden, with et

he importing capitalist importing he

even at a loss they loss a at even lity apples from apples lity

minute and by and minute the Polish the 160

CEU eTD Collection the between difference the price, market real the exports, the of cost real the include ordinanc an issued Trade of Minister The market. domestic the on prices the with coordinated be goods imported the of prices the while budget state the by covered be losses export p this that the of price the onto countries goods. imported capitalist the to export from losses the transfer Finance of Ministry by covered the and enterprises trade foreign by the everywere month which reported category special a as calculated were trade from losses the All clear USSR the central The with contract 356). the communicated not had it that F complaints many received committee Bulgarian Sofia, (CPRO, of chapter Union previous the the of in offspring analyzed Exporters direct the was Bulgarplode 1948 “Despred”. 23, May established and “Rudmetal”, “Balkanturist” were “Raznoiznos”, Those “Hranexport”, “Bulgartabac”, export. “Chimimport”, and Bulgarplodexport”, import “Industrailimport”, for “Metalimport”, planning state of agents foreign ten The inefficient. increasingly became wouldconstrained topolitically be equal zero (Bergson, it 1980:303). w trade, CMEA consumption domestic inBulgaria export and in bloc. theCMEA for reserved were goods quality lower The currency. convertible of source a were s rsl o icmeec te oeg tae etr okd t ls and loss a at worked sector trade foreign the incompetence of result a As twothe hypothesisof the confirm documentsarchival The A 1953 report of Mr. Zahariev, department of price of department Zahariev, Mr. of report 1953 A ractice hinders the activity of the export enterprises and proposed that the that proposed and enterprises export the of activity the hinders ractice e N.525 of 04.12.1952 that all applications for an export license should license export an for applications all that 04.12.1952 of N.525 e ly and that it had accepted imports before securing buyers for them. for buyers securing before imports accepted had it that and ly ih hw ta i tae ewe mmes f h bo wr not were bloc the of members between trade if that shows hich

(Ibid.). The Ministry of Foreign Trade had a common practice to practice common a had Trade Foreign of Ministry The (Ibid.). Central EuropeanUniversity,Budapest

rd etrrss ee h main the were enterprises trade - setting at the ministry, reads ministry, the at setting - dimensional model ofmodel dimensional

–

pand losses” “planned

Vera Asenova xport, 161

CEU eTD Collection 1932 In a nominated 1917. be tra to revolution proposed and October USSR the with the relations trade after closer advocates active Bulgaria to is returns and Bolsheviks Russian the with connections 63 tel send to Union Soviet the from dialed been have lengthy and 62 176K F Sofia (CPRO, 1/1202). countries two the between relations payment and trade regular promoting and Moscow in agency trade foreign Bulgarian a of establishment interested Taushanov Peter by approached repeatedly was Trade of Ministry The trade. of costs the increased which commissioners, and intermediaries party third countri two the between agreement trade no was there However established. were countries two the between relations diplomatic when 1935 after resumed Union Soviet the and Bulgaria between trade International 5.2.2. the of expedition untimely related exports costs to bureaucratic mismanagement to due others produce destroyed to due were losses the of Some budget. state the by covered were which days, ten to week a of period an 3 between approximately were Bulgarplodexport of exports should payment (ibid.their be identified 126). planne the andlosstwoplanned the loss above unplanned that negative), (positive or may occur

The de representative in of Bulgaria in Moscow (CPRO, 2003 (CPRO, Moscow in Bulgaria of in de representative on 1881 Born re is evidence of of evidence is re all from losses Estimated cost. economic direct a had personnel of change The

The s changes oftrade egrams instead and conduct conduct instead and egrams

calls for about 50 000 lev 000 50 about for calls in becoming a Bulgarian a becoming in oe wee h raos o te nlne lse ad h sucs for sources the and losses unplanned the for reasons the where one, d

n vlnrd suid a studied Svilengrad, in

exorbitant telephone bills for calls to the Soviet Union Soviet the to calls for bills telephone exorbitant

focused and concise concise and focused tructure t Odessa Orthodox Seminary and lived in Russia; had close close had Russia; in lived and Seminary Orthodox Odessa t s (Ibid.p 97). At the same time no time same the At 97). (Ibid.p s

trade representative trade Bulgaria. The Minister of Trade ordered the ordered Trade of Minister The Bulgaria.

es and exchange was facilitated through facilitated was exchange and es

phone phone : 409 ). ). calls when needed when calls 62

(CPRO, Sofia, 356/1(CPRO,Sofia, in Russia, in

high speed or priority calls calls priority or speed high d 9 million levs for a for levs million 9 d , especially high especially ,

advocated for the for advocated

(Ibid.). (Ibid.). 63

employees employees –

who was who

/144). /144). - speed speed 162

CEU eTD Collection in signed was USSR the with agreement clearing new A 2004:1090). ed. (Avramov, 1945 March 14 on signed was agreements, trade and clearing German the to similar documents needed the issue withoutdelay. to were authorities relevant all and Bank Central that for and Bulgaria in purchases for assets blocked its of all use to allowed was USSR The year. following the renewed be to was terminated, not if agreement, The (ibid.). Bulgaria to directly materials these delivered USSR t for used be to exchange value. free for same allowing of the Instead for goods of export counter a with months six within cleared be interest extend would they Thus accounts. irres presented, was documentation payment the as soon as accounts clearing the of creditors the pay to obliged were banks central Both immediately. transferred be payments all that 5 clause a included agreement m 460 at fixed was and exports of value the equaled imports of value The 176/11/1830/1). F Sofia, (CPRO, service diplomatic its of payments for including Bulgaria in purchases for account clearing but prices their with import and appendix an export in listed goods of number a for immediately granted The be to were licenses Bank. National Bulgarian the at levs in account clearing the and Bulgaria of governments the between signed was agreement payments and trade government the and trade total Bulgaria’s of percent 80 over already was Germany on dependence h opruiy e one a ws ny elzd n 90 when 1940 in realized only was at pointed he opportunity The sce tae gemn bten ugra n te SR wih a very was which USSR, the and Bulgaria between agreement trade secret A oit no. l pyet wr avne truh non a through advanced were payments All Union. Soviet

made an effort to diversify its trading partners. On 5 On partners. trading its diversify to effort an made

o qatte. h US ws o s fel te us n its in sums the freely use to was USSR The quantities. not

es o te 90 gemn (bd, ) The 2). (ibid., agreement 1940 the for levs - Central EuropeanUniversity,Budapest free credits to each other, which were to to were which other, each to credits free pective of the available funds in the in funds available the of pective he import of raw materials the materials raw of import he

ups te Bulgarian the purpose -

neet bearing interest January 1940 a 1940 January Vera Asenova trade trade 163

CEU eTD Collection years. five to up for imprisonment as severe as were violation for sanctions the and controls law this of means By 1946. August 1 on adopted text final its and 1945 May 3 of law new the by stipulated Bulgaria’s exportnota although primary one. hav to continued foodstuffs and Tobacco (Ibid.). products 1951 years pharmaceutical and chemical the some cotton, of export the In with experimented Bulgaria machines. some and resources mineral food, processed The 1989:142). (Nikova, percent 54.5 plan five the of end the at and percent 62.7 was it 1949 in export, total the of percent pre s export The Germany. from 1930’s the in import to used Bulgaria goods of types same the largely were These rubber. and fertilizers products, chemical foodstuffs) (except materials raw metals; and ores import total of percent 90 five first the During capabilities. export diminished its of because countries these with deficit trade a had Bulgaria years three first the For Czechoslovakia. for the to due is Germany econom the of of complementarities place second The Bulgaria. mainly to exported equipment which industrial Czechoslovakia, and GDR the by followed trade foreign 1999). (Avramov ed., countries socialist among settlements clearing in dollar US the replaced which ruble, clearing the to tied was lev the 1952 In goods. different for rates exchange fixed 1946. April 27 on Moscow - a yas Wie n 99 h epr o arclua pout ws bu 80.4 about was products agricultural of export the 1939 in While years. war By the the By h BB otne is oooy vr oeg ecag tascin as transactions exchange foreign over monopoly its continued BNB The end of 1946 the Soviet Union accounted for 80 percent of total Bulgarian total of percent 80 for accounted Union Soviet the 1946 of end

The corresponding accounts were settled in US dollars at dollars US in settled were accounts corresponding The was machines and industrial equipment, petrol, mineral mineral petrol, equipment, industrial and machines was over currency possession and transactions increased transactions and possession currency over ic structures of the two countries; the same is valid is same the countries; two the of structures ic tructure changed considerably compared to the to compared considerably changed tructure re was a notable increase in the export of of export the in increase notable a was re

a iprat lc in place important an e - year plan year - year 164 - 52

CEU eTD Collection to according specialization the in international managed is whole a as CMEA the that is and thesis One advantage. comparative flexibility hinders which trade, organizing of way inefficient an as seen is economy planned the system, clearing the of criticism th the to Similarly efficiency. literature its of view systems of point the economic from approached comparative the In states. different the of advantages comparative the to according not although democracies people’s the between integration economic for allowed it hierarchy security and authority the Sovietthe cases,thetwo clearing primarilyfunctioned bilateral systems regimes. as and Nazi the both in payments multilateral introduce to efforts were there although rub transferrable the introduce to plan A setting. of price system socialist the reforming however without them overcome to will political the and system bilateral the of limitations the acknowledged that, after even scarcely implement not although decision, This 1956. in system the multilateralize to decision the with marked and 1949 January 25 on Assistance Economic Mutual for Council the of founding the with formally established regime 1944 period The 5.3. interwarthe period. in controls any than severe more far were measures These 2004:1106). (BNB proof inspector BNB law. respective the of violations register inspectors own its have to empowered also was bank central The TheOrigins of theCouncil for Mutual Economic Assistance

The CMEA had an important role for the building of the soc the of building the for role important an had CMEA The - 1956 is the first phase of of phase first the is 1956

s’ reports were considered a legal evidence of evidence legal a considered were reports s’ Central EuropeanUniversity,Budapest h eouin f h scait clearing socialist the of evolution the ed in practice until 1964, and 1964, until practice in ed e a aotd n 96 and 1956 in adopted was le ialist bloc. Alongside bloc. ialist Vera Asenova bo is bloc e

165

CEU eTD Collection products. such processed from goods and Soviet the currency from imported convertible they for products exchange in and west the to sell to countries European have losses thangains rather incurred on sidesboth thesame tradetransaction. of may countries socialist the other each with trade In USSR. the and country bet trade for only estimated is however This loss. economic bu West, the with relations financial and trade from economies their isolated deliberately 1930’s the in Germany on debate trade of terms the Europe, Eastern with trading while lost have to found was Union Soviet bloc socialist the of trade the of trade clearing bilateral the for used more and USSR the was argument the same that interesting worldis than (ibid.). It EE prices” toto favorable favorable less are Europe) (Eastern EE the and USSR would Union mo been have would exports of prices Soviet the for while loss, a at trading be would countries European by of bilateral negotiations. means leve international the at planning central that no was is there one another plan; central a through republics socialist the of rest the over control Soviet of organ an was CMEA the that is argument One countries. socialist economic domestic transferredrelations are theinternational onto level. the that and economies planned domestic the as way same while t ego, 90 id ta i tae a cnutd t ol pie te East the prices world at conducted was trade if that finds 1980 Bergson, of level the concerns debates of set Another nte apc o te oils bo tae s h otn rcie f h Eas the of practice often the is trade bloc socialist the of aspect Another Germany

elzd cnmc gains economic realized –

such trade is marginally better than no trade at all. If the If all. at trade no than better marginally is trade such

re beneficial or “the terms of trade between thebetween trade of terms “the or beneficial re interwar period and the bilateral clearing bilateral the and period interwar a n sc fnig Bt hegemons Both finding. such no had te oit no md marginal made Union Soviet the ,

economic integration between the between integration economic

l and that trade was assigned was trade that and l ween a East European East a ween

166 t

CEU eTD Collection Bulgarian. in available sources to primary betwee relations economic 64 a in was Union Soviet The region. the of rest the with trade diversified most the had eco their of structures export similar the to due other each with extensively traded not have region the of countries the Germany East and Czechoslovakia of exception the With socialism. under trade theoretical much not and ideologues Communist the by clear prescribed cooperation no socialist was of model there theoretical fact in and prescription theoretical a on built not was was CMEA plan Marshal the that was propaganda to unacceptable Soviet official The West. the to opposition an as bloc the of consolidation ideological the for role important an played Mutual for Council was 1949 AssistanceEconomic (Ibid.2 January 25 on adopted press in one announced the and officially but Committee” Coordination “Economic was plans documentation economic their of coordination to (Nikova,1989) down comes which states its member among policies economic of coordination the was CMEA the of purpose main the that argues Nikova Gospodinka historian Bulgarian USSR. the by else everyone the and depende loyalty very its politically was for Bulgaria that exchange understanding in USSR the by terms economic preferential particula in Bulgaria and period interwar the in Germany by practiced widely was arbitrage Such

ioa n Zae hv done have Zlatev and Nikova On the case of Bulgaria there are two rival arguments arguments rival two are there Bulgaria of case the On h rcntuto atr h wr n te onefre f h Mrhl Plan Marshal the of counterforce the and war the after reconstruction The r protested thereexport its of tobacco. 64 . The name of the institution that was proposed in the preliminary preliminary the in proposed was that institution the of name The .

the socialist republics because it threatened their sovereignty. The The sovereignty. their threatened it because republics socialist the

n Bulgaria and the Soviet Union and I use their works as the main refence main the as works their use I and Union Soviet the and Bulgaria n

eay rm ax n ei o te su o international of issue the on Lenin and Marx from legacy

7). 7). nomies. Czechoslovakia as the most industrialized of all of industrialized most the as Czechoslovakia nomies. the most most the

extensive archival research on the topic of trade and and trade of topic the on research archival extensive Central EuropeanUniversity,Budapest

t n epotd ut like just exploited and nt –

that Bulgaria enjoyed a enjoyed Bulgaria that Vera Asenova 167

CEU eTD Collection opposition Soviet The negotiations. further declined and hypocritical merely was join Ameri the that suspected Moscow Europe, of split political a avoid to orderin Plan Marshal the in Union Soviet the of inclusion the advocated Britain Great and France While currency. its of means by countries weaker of policies economic Sta United the of attempt an as Union Soviet the by seen was Plan, the cooperationprovided economic of framework (Ibid.46). agr such signed All countries 1948. in signed were they Romania and Hungary Bulgaria with while War the during already concluded were Poland and Yugoslavia Czechoslovakia, and Union (Nikova,goods 1989:42). of export counter a with year following the in back paid be could that kind in credit gol or currency convertible with debts outstanding of balancing yearly the for clause the of abolition the was aspect new The way. different slightly a in functioning started system capitalist the from inherited indeed Se the were After deals. Council trade international the within place took that activities assistance” “economic of majority the However, plan. the to according trade foreign coordinate to difficult mos was trade foreign completed percent (Nikova,1989:38). one about was USSR the with trade their and trade total their of percent International Second War. World long - atn eooi ad ilmtc slto fo te et f uoe eoe the before Europe of rest the from isolation diplomatic and economic lasting h bltrl gemns o finsi ad oprto bten h Soviet the between cooperation and friendship for agreements bilateral The h atraie rmwr fr ota rcntuto o Erp, h Marshal the Europe, of reconstruction postwar for framework alternative The n h frt er o te MA eoe h poes f ainlzto was nationalization of process the before CMEA the of years first the In

eet wt ec ohr n h pro 1946 period the in other each with eements

trade among east European countries was about 10 was countries among about European trade east l ognzd y rvt etrrss Ti ae it made This enterprises. private by organized tly d. Export surpluses were treated as short as treated were surpluses Export d. cond World World cond War War iaea laig hc was which clearing, bilateral

tes to control the control to tes can proposal to proposal can - 99 which 1949 - term 168

CEU eTD Collection thesecurityprovided to this parti dimension 1955 in Pact Warsaw the of signing The spheres. economic and political rival two intoEurope of division the wasresult The loans. dollar for rates the market than rates credits reconstruction extended USSR The assistance. economic Soviet the on dependent Europe of Eastern made and influence Union Soviet of sphere the delineated clearly Europe postwar in cooperation M the from Europe Eastern of exclusion The policy. commercial its on decide to free not is and power of another influence the under acts government Polish the that concern the with decision funding the cancelled to promised Development and Reconstruction for Bank International it(ibid.result withdrew the51). a theunder pressure ofthelater SovietUnion As from were Czechoslovakia and Turkey Greece, invitation. the declined Union Soviet the and invited were countries European government 22 which French to negotiations, of the round new 1947 a initiated July 12 on when rhetorical only proved proposal occupation. German by damaged most were that those especially autonomy.disregard their and policy economic its to countries small the subordinate would which countries, Economies European leading the by managed be would plan the that concern the on based was

h Sve counter Soviet The h ol Es uoen onre t cet h ivtto bt Czechoslovakia but invitation the accept to countries European East only the -

ugr, zcolvka Pln ad tes Te ak utfe its justified Bank The others. and Poland Czechoslovakia, Hungary, Great Britain, France the Soviet Union and not more than four four than more not and Union Soviet the France Britain, Great -

rpsl a fr h icuin f h salr countries smaller the of inclusion the for was proposal arshall Plan and the institutional framework for economic for framework institutional the and Plan arshall tion. Central EuropeanUniversity,Budapest

n id n i rbe a lwr interest lower at rubles in and kind in

However, this this However, Vera Asenova other 169

CEU eTD Collection and Prague Budapest, Bucharest, Sofia, from Yugoslavia to sent were replies Similar friendship. of policy returns and policy hostile its abandons it after only member a become can Yugoslavia which to other each toward policy fair and honest conduct which states, friendly among cooperation economic regul for organization an not is CMEA 65 coordinat of goal ultimate the achieving for principles founding the of one was treatment” “Equal 1989:60). (Nikova, etc. machines foodstuffs, materials, raw securing for aid mutual stated werebroadl aims The agreements. bilateral on primarily based was cooperation themformally adopted laws.as a had internal on policy, deciding economic bureau, the of decisions The Moscow. in situated was it, to assistance technical the and state member each of representative one of consisting was session Each development. future the over Presiding delegation. its by session the in for represented was country member directions choosing and issues main discussing Sect 1975:63). organ highest the was session (Fadeev, CMEA The 1956. until created not were Sofia commissions in session twelfth the at adopted was statue official its when 1959 December 14 were until decrees functions separate and of series structure a by Its directed 1949. in bureau the for selected were country Bulgaria, by founded 1992:3). (Balassa, organization economic regional was assistance economic a as 1949 January25 on USSR the and Poland Romania, Hungary, Czechoslovakia, mutual for council The 5.4. InstitutionalFramework of theCMEA

Yugoslavia protested its exclusion from the organization to which the Soviet Union explained that that explained Union Soviet the which to organization the from exclusion its protested Yugoslavia

Warsaw, which clearly indicated which clearly Warsaw, In the early period (until 1953) the institutional structure was fairly simple and simple fairly was structure institutional the 1953) (until period early the In a eooi oprto, ehia assac, xhne f xets and expertise of exchange assistance, technical cooperation, economic as y ion national economic plansof (Ibid.).

h lae o te otn dlgto. t atv organ active Its delegation. hosting the of leader the

avsr fnto utl h nto sae’ governments states’ nation the until function advisory n

the political nature of the of nature political the ar economic cooperation but an exclusive organization for broad for organization exclusive an but cooperation economic ar

newly formed organization. newly formed

Two repre Two sentatives from each from sentatives -

h bureau, the

to the the to oral 170

CEU eTD Collection softgoods. were termed market socialist on the be sold only that could 66 was tobacco American addition In it. for exchange in machines export to willing not treat countries bloc The market. socialist the to exported Bulgaria which tobacco, of price international the about concern concrete theinternational of trade regime. the influ of to allowed was it initially,partner distrusted a although and design CMEA institutional the to access direct a had Bulgaria member, founding a As CMEA. the of members all of treatment neg equal of rhetoric Plan entered leadership Marshall the leaving after especially and states” warm and “fraternal withof hard Moscow.militaryrelations Moving bloc a building power to from Party Communist the of behavior obedient secured politics Bulgarian Stal with relationship unique Dimitrov’s Georgi Union. Soviet party the of ally communist loyal a considered with and state the development of head the economic at members type Stalinist of path same the and facilities irrigation industrialtransportation and (ibid., production 63).units and production energy of development the were projects 1950 period the for states member among supply materials ball of production the increase to advised were session Second the during made was specialization at attempt first The 62). (Ibid., metallurgy and industry, extraction the developing and electrification five first the in included and 1949

In CMEA negotiation export items that could earn hard earn could that items export negotiation CMEA In By the time of the form the of time the By 26 CMEA the of session first the at defined priorities economic The t h fudn meig f h CE te ugra dlgto epesd a expressed delegation Bulgarian the CMEA the of meeting founding the At -

7 uut 99 n oi, hr Pln, ugr ad Romania and Hungary Poland, where Sofia, in 1949 August 27

al establishment of the CMEA Bulgaria was already on already was Bulgaria CMEA the of establishment al

- er ln ee nutilzto udrto as understood industrialization were plan year Central EuropeanUniversity,Budapest ed tobacco as a weak good weak a as tobacco ed

currency were termed hard goods and those those and goods hard termed were currency n n udsue ifune over influence undisputed and in - erns n t coo to and bearings

machine

- 1953. Other discussed Other 1953. tain, h Soviet the otiations, - ulig chemistry building, ence the rules the ence Vera Asenova 66 dnt raw rdinate

and were and - 0 April 30 171

CEU eTD Collection 67 to had dollars in outstanding US payments allthat meant bloc. This the accountfor of unit main the became ruble soviet gold the 1950 From currencies. different on based then until which payments, international of question the discussed Council 131). (Ibid., year one to up for agreements on based was long of basis the and satisfied were Bulgaria Council. byadopted the of propositions Both 1989:129). (Nikova, currency a They step. this making before experience more accumulate to need would bloc the that 1949 in clearing multilateral adopt to early too was it that opinion the expressed theworldlevel pri than higher a at prices its sets CMEA the that insisted delegation Bulgarian the arguments these on Based bankruptcy. into population rural the driving without costs production stage current the at that the and prices world the that than higher were items argued export s it of Bulgaria some for costs production trade. CMEA the in prices for benchmark a as served soc among trade However market. world the providedoftobacco theemploymentwhole regions thecountry. in on competitive not was it therefore quality, lower of c more was one producers. Bulgarian tobacco, American the Bulgarian to Compared the bankruptcy with threatened which Europe, in imported lso insisted on setting insisted base on estimating ratelso exchange for country’s each a firm the of

Only with Czechoslovakia and Poland there were long were there Poland and with Czechoslovakia Only On the point of organizing multilateral clearing system the Bulgarian delegation Bulgarian the system clearing multilateral organizing of point the On for prices” “fair adopted CMEA the that demanded delegation Bulgarian The The second session of the Council decided that trade should be should trade that decided Council the of session second The - ialist countries (Nikova, 1989:129). The prices on the world market world the on prices The 1989:129). (Nikova, countries ialist term agreements. However, in practice most of the trade of Bulgaria of trade theof most practice However,in agreements. term

ces. ces.

of its economic development Bulgaria could not decrease its decrease not could Bulgaria development economic its of

- term agreements. agreements. term 67

At the same same the At

ostly to produce and produce to ostly

organized on organized session the session had been had 172

CEU eTD Collection remained trade international food, and goods consumer of shortage expensive and and production industrial quality low of excess others; of expense the to sectors certain of exchange in and goods Bulgarian the supplyuninterrupted and ofraw energy materials resources for markets foreign vast and secure for opportunity an provided bloc Soviet the with trade of system clearing bilateral b in behind lagging also was production Agricultural population. working the for products agricultural and goods consumer minimizing any pote way effective and most coordinating while a countries capitalist the in in import and use export to to opportunities was commission this member of each purpose in The established country. was world capitalist the with countries CMEA the of trade foreign of foreign coordination the free for commission for A option. an them not was selling exchange and levels quality western than lower far of goods were latter The prioritized. be should bloc the within from import and currency hard s avoid to order in goods, deficient most the to restricted be should countries Bulgaria. by secured benefits economic tangible of examples are and 1930’s the of polices creditor its from more import to country the allowing considerably decreased payments debt Bulgaria’s recalculation this At ruble. the of overvaluation in resulted and assigned dollar The rubles. Soviet in recalculated be h Cucl lo rvdd rcmedto ta ipr fo te capitalist the from import that recommendation a provided also Council The While coordination of production plans resulted in disproportionate developmentdisproportionate in resulted plans production of coordination While of shortages serious created had development industrial extensive 1953 By -

the Soviet Union. Such artificial stimuli are very similar to the G the to similar very are stimuli artificial Such Union. Soviet the the main field of socialist economic cooperation until 1956. The agreement The 1956. until cooperation economic socialist of field main the ntial competition between bloc for members markets. foreign - oth output and technological level. The The level. technological and output oth Central EuropeanUniversity,Budapest ruble exchange rate was adminis was rate exchange ruble .

Vera Asenova erman trade erman pending tratively

173 -

CEU eTD Collection were and economy Bulgarian the in application little had which plan, the outside goods import to Bulgaria surplus had thetrade balance to In trade. order international no was administration Bulgarian the and market. world the on items needed the purchasing to impediment serious a was Bulgaria, lac The offered. goods of kind the in and quantity in both countries other of several import for plans the match not or did countries one of export for plans the often Very production. surplus and deficits acce mutually a define to time more took market socialist the a develop, to which found of basis the on easily structure complementary Germany and Bulgaria of economies the where regime previous interests, national to Matching countries. partner of time needs the and needs own their prioritize and took research countries The Romania. and Bulgaria as such structures economic initially value. of terms in also but goods of kinds of terms in only not trade foreign of planning the the using of practice previous the replaced which year, previous the in prices the on based policy price coordina export the of implementation the control would it that was CMEA the of session founding the at The coordination of national plans for import and export proved more difficult that difficult more proved export and import for plans national of coordination The At the third session of the council in 1950 the CMEA countries adopted a fixed fixed a adopted countries CMEA the 1950 in council the of session third the At The situation was even more complicated than during the trade with Germany with trade the during than complicated more even was situation The

envisioned, especially in the case of trade between countries with similar similar with countries between trade of case the in especially envisioned, te the te plans transport developing international for and transitroutes.

- import plans for the priority items in each country’s foreign trade; it would it trade; foreign country’s each in items priority the for plans import

ed ad osblte ws o a moh rcs. nie the Unlike process. smooth a not was possibilities and needs prices of the capitalist world market as a reference. This allowedreference. This a as market world thecapitalist of prices k of convertible currency, especially in the case of case the in especially currency, convertible of k ptable division of labor. This resulted in chronic in resulted This labor. of division ptable a efcet raie ad aae of manager and organizer efficient an t

174

CEU eTD Collection a and burden a realize became empire to the however position time, With a it. from in benefits economic was Union Soviet the that means This period”. Stalinist “So that finds 1985 Bunce, 1960’s. and 1950’s late the during advantageous more became but beginning the in countriesEuropean East the for costly was countries European East the and USSR the between trade the that literature the in asserted commonly is It Conclusion refrigeration industry textile the and installations milk for machines weaving and sawing Germany, transportatio imported Bulgaria Czechoslovakia, From Czechoslovakia. and Republic Democratic German the were Bulgaria to importers biggest third and second the Union Soviet the After increas to agree not did Bulgaria but fodder, and grain more exported Bulgaria that demanded industry,until imported. chemical itthen which of sod washing penicillin, export to started Bulgaria 1955 In tiles. ceramic and products porcelain and glass furniture, shoes, textiles, wool and silk cotton, were Union Soviet the for items export new Other 1989:164). ex and extraction the 1955 From ores. lead were export (Nikova,An items important Bulgarianthan1989:163). of more of item consisted 600 usually,re n em o epr ngtain GR Cehsoai ad oad continually Poland and Czechoslovakia GDR, negotiations export of terms In industrial of export The

e these exports because this would endanger the population's food supply. food population's the endanger would this because exports these e - exported. viet returns from empire were remarkably close to the ideal during the during ideal the to close remarkably were empire from returns viet

- ic n cpe cnetae, rn agns, yie n other and pyrite manganese, iron concentrates, copper and zinc

- processing facilities chemicals, paints chemicals, and facilities processing fertilizers. n

equipment, equipment for water electric plants and from East from and plants electric water for equipment equipment, goods reached 50 percent of total exports in 1955 and 1955 in exports total of percent 50 reached goods ot f ugra pto bgn (Nikova, began petrol Bulgarian of port Central EuropeanUniversity,Budapest

a, caustic soda and other products other and soda caustic a, Vera Asenova

175

CEU eTD Collection the of interest national the against were demands his when even Stalin to obedient being but position government or administrative high a at remain to sufficient not allegiance swear to ready cadres communist new the without and personnel of change this without possible not was Union Soviet the to Germany from authority of transfer The effects. the at made choice lev highest a was personnel regime old any of administration state the ridding after clearing bilateral of continuation The regimes. trade between arbitraging in embodied the new institution – Bulgaria surprisingly was It country. socialist each of members equal as participation unilaterally were rules whereinfluence of sphere German the in unlike but Plan, Marshall the join to allowed not were They organization. new the in reflected the were interests their and at involved However, 1980:305). (Bergson, reparations” t of establishment of form the in E[urope] E[astern] from exports “the was unrequited USSR receiving War Second the of World and many 1949 come.for decades to cheap goo their for to more markets export access and in resources secured but democracies prices people’s world the in prices” not “fair trade advantageous to deciding and regime trade clearing Th USSR. the liabilityto

one of the small and less developed member countries, to have its preferences preferences its have to countries, member developed less and small the of one It was demonstrated on the case of Bulgaria that in the early years after the end after yearsearly the in Bulgariathat of case the on demonstrated was It h yas f iaea cern tae ih emn hd agt h lso of lesson the taught had Germany with trade clearing bilateral of years The el of international economic negotiations and one of formative and lasting and formative of one and negotiations economic international of el to the center of power in Moscow. Being a devout communist was communist devout a Being Moscow. in power of center the to he new international trade regime all members of the CMEA were CMEA the of members all regime trade international new he e b Bri, h CE ws omly salse wt the with established formally was CMEA the Berlin, by set e present chapter demonstrated that by adopting the bilateral the adopting by that demonstrated chapter present e .

ds at overpriced rates from as early as as early as from rates overpriced at ds 176

CEU eTD Collection 1993). Sawin, and (Swain in Bulgaria communists was severely he Union, Soviet h For goods. traded internationally of prices the about information important Soviets the to disclose to refused he this capacity Economic and the Finance of President and Ministers of the Council of 68 poi the From imperial. as literature the in described often systems, hierarchical international two the of part important an as and powers regional of change across continuity institutional of case unique 1933 period the in Bulgaria with hegemonies regional two bybilateral clearing of application the of study comparative a presents thesis The quality and securing prices goo raw worldfor and above deliveries materials market of discount with purchased words other in was loyalty Political USSR. the with trade their from benefiting as seen be can countries European Central East the parameter pr world at than prices CMEA at worse continually were they Union Soviet the of trade of terms the at Looking rigid. very proved rules these that show CMEA of thelater periods on researchbut this question of the isnot chance done was this choice. theirWhether of rules of basis the on regime new the building and consideration into preferences their taking by countries small the of autonomy international some allowed They capitalism”. western of methods contra in partners equal as region the of countries the treat control unprecedented thedomestic politics Bulgaria. of in necessary a was state small

A convicing example was the trial and execution of Traycho Kostov Traycho of execution and was trial the example A convicing t h itrainl ee hwvr te oit hd o eosrt ta they that demonstrate to had Soviets the however, level international the At

competitiveness.

–

Nazi Germany and the Soviet Union in their trade relations trade their in Union Soviet the and Germany Nazi punished despite the fact that he was one of the most prominent prominent the most of one was that he fact the despite punished

is defending the is defending condition

– Conclusion nt of view of a small trading partner partner trading small a of view of nt

1956. The bilateral trade regime is defined as a as defined is regime trade bilateral The 1956. 68 . Show trials, pogroms and terror established established terror and pogroms trials, Show .

national interest of Bulgaria in negotiations with the negotiations in Bulgaria of interest national Central EuropeanUniversity,Budapest

in 1949. Kostov was President President was Kostov 1949. in

- Financial Committee and in and Committee Financial t o h “exploitative the to st intentionally or byintentionally or ices and on this on and ices – Vera Asenova

Bulgaria, the Bulgaria, ds of of ds lower 177

CEU eTD Collection was superiority economic Its blindly. followed be to model a not was and WWI during suffered Bulgaria loss the for blamed partly also wasGermany Peace. But Versailles the claimssharedrevisionist of and camaraderie res 1930 the in relations State Germans. with trading when codes cultural and language the of knowledge good had and Austria and Germany in education their received had period interwar the in figures Bulgarian an system educational culture, high German of reputation the and Bulgaria in sector agrarian the of modernization assist to efforts German the on based was attractiveness its prospects; economic Bulg the for factor modernizing a as Germany of authority and reputation of level is high by characterized power soft The war. the during exploitation economic or power hard a to 1933 theinternational therules shape of trade regime. to also but positions political subordinated their from benefits economic marginal extract to only not able were they that and them to ascribed usually is it than choice i thesis main The regime. the sustaining and defining in played groups societal and institutions local role the as policy well as Bulgaria in makers of limitations and goals choices, the describing relations, trade bilateral of Second approachedthe thesmall isalso state from perspective.World War after and during changes radical amidst continue regime the did why question The its kept which competi the from economy shielded bloc, Soviet the of collapse the until Depression Great the of time thetrade from international conducting of method main regimethe wastrade bilateral In regimes hegemonic two the contrasts analysis The entoa heacy eeoe fo a ot oe psto o Gray in Germany of position power soft a from developed hierarchy ternational arian economy and a partner who promised more than beneficial than more promised who partner a and economy arian idsra aheeet. ay f h leading the of Many achievements. industrial d tion of the world market for more than sixtyyears. more than the for of worldtion market ted on a history of friendship, wartime friendship, of history a on ted

admired, its political authority was authority political its admired, s that small countries had more had countries small that s

by constructing a narrative a constructing by

178

CEU eTD Collection position previous its explain to had government the Soviets, the of trust the win to order In untrustworthy. therefore re real and Bulgaria reparationsof financialoccupation extracting considerable and form the of in theworldthan market mobility with by capital him. global studied t clearing bilateral and market regional a as such conditions restricted more even under policy economic active have can states small that demonstrating by markets” world in states “small of analysis Katzenstein’s of scope the extends competent i experience and Bulgarian the strong of analysis a The state. building corporatist while economy German the with integration currency hard the stimulated Exporters, of Union the and organizations professional the with consulted it interests, Bulgarian of representative a legitimate as acted government Bulgarian the demands and rules German to adjustment corporatist a economy.type in of role political so own certain autonomywhileits itdid sector, up trade strengthening over itsforeign (Tooze eaten” be or gave state the although and 1940 around contested was “eat authority German 2011:49). to dilemma the with faced Germany of ally reluctant very a became was Bulgaria 1941 In experts. Bulgaria, German with debated openly to profile agrarian strictly assigned which Europe, of organization Ger the and circles economic Bulgarian by criticized more and more was Germany of power the near, drew WWII of time the As Bulgaria. of interests national the against weighted always and questioned also but significant The regime of bilateral of regime The Soviet hierarchy, unlike German one, started with hard power or the war the or power hard with started one, German unlike hierarchy, Soviet sources from Bulgaria. Initially Bulgaria was seen as a German ally and ally German a as seen was Bulgaria Initially Bulgaria. from sources

trade was designed and imposed by Germany but in its in but Germany by imposed and designed was trade - ann epr atvt. t use a atv plc of policy active an pursued It activity. export earning vis - à - vis

the Reich and to demonstrate full support for support full demonstrate to and Reich the Central EuropeanUniversity,Budapest

iacd h epr t Gray and Germany to export the financed man plan for post for plan man te newr period interwar the n

- war economic economic war

Vera Asenova n Ivanov, and ae rather rade - time time 179

CEU eTD Collection regime industrial increased and trade production as early 1949. as loya secured and personnel the on bilateral the within concessions economic extended but hand positions, key in communists heavy a kept It exports. own its for prices world than lower and goods export European East for prices world that higher of form the in concessions tangible more offer to had Union Soviet the Bulgaria from and consideration into taken therules in implemented of the new institution. were economy, political socialist with compatible founding its at members all equal included as trade international them for treat organization new to The willing partners. was it that demonstrate to had Union Soviet the s small the of affairs domestic the in the interfering of on mechanism a Plan was it Marshall that grounds the rejected Union Soviet The sector. controlling internal while the level closely international the at autonomy more allowing power softer fro developed hierarchy Soviet countries. European Eastern and Central other the to relation in USSR the to available not was power” “soft potential Such 1950’s. early the in purposes propaganda for exploited fully was which nations, two sen brotherly a brought heritage religious and linguistic Shared Russo the during Empire Ottoman the from Bulgaria of unmatched by th terror of methods introduced and Bulgaria in influence German prior any exceeded affairs domestic in interference Soviet West. the from ties cut to and officials level Stalinist ae.Atrecuig h Es CnrlErpa cutisfo atcptn i it, in participating from countries European Central East the excluding After tates. Russia was also traditionally friendly to Bulgaria, having achieved the liberation the achieved having Bulgaria, to friendly traditionally also was Russia hl Gray sd t eooi atatvns t etat eco extract to attractiveness economic its used Germany While - ye cnmc eeomn; o elc al l rgm pronl n high and personnel regime old all replace to development; economic type etn ad hi peeecs hwvr iie wti te options the within limited however preferences, their and meeting e e previous domestic regime.

- Turkish war (1877 (1877 war Turkish iet ewe the between timent

oi gains nomic hr to hard m –

1878). 180 l

CEU eTD Collection sector the USSR to tied was which export Finland’s to management of type corporatist a about brought trade clearing trade bilateral with Sov the Co Economic for Organization the of member a and country capitalist a Finland, desired. so it if out opted have could and thoug even Bulgaria, with traded it rules same the under it with traded Union Soviet The Yugoslavia. of case the in obvious is regime the of continuity The degrees. different to and ways different state. official the of interest the as understood is interest their as long as interest their in were adopted they rules the that and states small the of participation the of because i prove to aim does thesis the What regime. trade the from loss or gain net the about statement a make to us allow not costs Thi states. protectionist mutually of dyad a organize to way the with CMEA the of meeting founding the at delegation ten The securin and offers it opportunities the officials state the to demonstrated had regime clearing bilateral of experience diverge it where interest national the for regard by motivated questions specific on actions fact In negotiations. international in interests their representing or groups societal The small state in the post war period cannot be seen as acting on behalf of behalf on acting as seen be cannot period war post the in state small The t s vdn ta th that evident is It –

d from the Soviet one were punished severely and demonstratively. The prior The demonstratively. and severely punished were one Soviet the from d structural rigidities, lack of innovation, lack of quality improvement, which do which improvement, quality of lack innovation, of lack rigidities, structural - er rcie ne Gra hgmn hd qipd h Bulgarian the equipped had hegemony German under practice year g politically motivated demand for economically uncompetitive goods. goods. uncompetitive economically for demand motivated politically g –

namely shielding from the competition of the global market global the of competition the from shielding namely Sve Uin a as taig ih ifrn cutis in countries different with trading also was Union Soviet e h Yugoslavia had more leverage against the Soviet Union Soviet the against leverage more had Yugoslavia h –

mainly wood materials and products (Laurila, 1995). At 1995). (Laurila, products and wood materials mainly tae ieso ad rd dsrcin lo had also destruction trade and diversion trade s iet Union until its dissolution. clearing itsdissolution. The bilateral Union until iet s that the continuation of the regime was possible possible wasregime the of continuation the that s - prto ad eeomn, a a active an had Development, and operation Central EuropeanUniversity,Budapest Vera Asenova 181

CEU eTD Collection the of emulation by convergence with intensified are ties economic bilateral when hierarchywas it politics. the Soviet the For economics. was it hierarchy define Nazi the For principle. organizing primary we once ways similar remarkably in operate hierarchies international generalizable. insufficiently as seen be may findings thesis the benefits convergencestate.institutional between hegemonic andclient politicall are markets because quality improving for incentives the removes and rigidities creates it structure; trade the on effect distorting strong a has trade clearing Bilateral mobility. capital and currencies domin the to parallel operate that trade regimes other all potentially and neighbors Asian East its and China Iran, and India sub in trade of authority weakened a of times in especially regimes, hegemonic regional of cases other to relevant is analysis This regimes. international influence can structures domestic how of explanation dynamic inte of effect unidirectional the Beyond economy. political domestic and regimes trade and monetary international gains. marginal arbitrage to position a in was Europe Central East differential, price the of Because trade. total their of percent 70 than more reached never trade clearing bilateral and world, the of rest the from isolated Un Soviet the neither time, same the This research is a contribution to the understanding of the relationship between relationship the of understanding the to contribution a is research This Future research would be interested to compare the the compare to interested be would research Future and costs economic their and alternatives political of study case single a As - Saharan Africa, which is attracting increasing attention of researchers, of attention increasing attracting is which Africa, Saharan

rnational regimes on domestic structures, I provide a provide I structures, domestic on regimes rnational

goa hgmn Sc eape ae Chinese are examples Such hegemon. global a ion nor the socialist republics were completely were republics socialist the nor ion

between the two regimes and extract positive extract and regimes two the between scrd I i as a tog atr for factor strong a also is It secured. y n goa rgm o tae n convertible in trade of regime global ant ere f convergence of degree

However, 182

CEU eTD Collection better a only not create to potential the the understanding of pastbutalso a more democratic public the discourse in future. has history throughout victims as responsible and challenging thesmall states actors, acceptedunderstanding of commonly political the responsive on relies democracy as much As behavior. it political with associated the and irresponsibility of culture a form victimization historical of narratives Persistent them. for accountable being and choices political making of responsi the from exempt as are governments seen their resources, and and choice victimized lacking are they as long As presented. are states small how for implications important has also It economies. managed administratively on research capitali on small done case research study bridging useful provides a thesis the states small of scholars For power. hegemonic the of not and state small the of that washere viewpointpresented the since avenue future a be would clearing for aims and motives the of investigation further a regimes Soviet and process the as such framework, legal

Europeanization. For scholars of the Nazi the of scholars For Europeanization. Central EuropeanUniversity,Budapest st countries with countries st

using bilateral using Vera Asenova bility 183

CEU eTD Collection А Public R Central PublicF 1580K/1/22 RecordsSofia,Central Office, PublicF 1580K/1/21 RecordsSofia,Central Office, PublicF RecordsSofia,Central Office, PublicF 1580K/1/14 RecordsSofia,Central Office, Public Central PublicF 445/1/73 RecordsSofia,Central Office, PublicF 356/1/144 RecordsSofia,Central Office, PublicF 356/1/119 RecordsSofia,Central Office, PublicF 356/1/116 RecordsSofia,Central Office, Central PublicF 285K/5/164 RecordsSofia,Central Office, Public RecordsCentral Office, PublicF 285K RecordsSofia,Central Office, Public F 259 RecordsSofia,Central Office, K/9/7 Public F 259 RecordsSofia,Central Office, K/2/77 Public F 191 RecordsSofia,Central Office, K Public RecordsCentral Office Public RecordsCentral Office Public RecordsCentral Office Central Public F 176 RecordsSofia,Central Office, K/1/2562 RBundesarchiv,Berlin II, 1303 43 Bank National Documents,Bulgarian Collection of ArchivalSources: Refe рхивни Справочници. Пътеводител на Мемоарните нархивни Пътеводител Мемоарните Документи БКП, Справочници. за Office, 4.1930 Office, Vol. 2003.) 2003.) Communist Bulgarian the CentralParty, kept at Publi Office.Archive Records References. IndexMemoir ofthe for Documents Съхраняванив ЦентралнияАрхив. Държавен София, 2003. (Central Public rences: rences:

Public Records Office, PublicF 316/1/189 RecordsSofia, Office, Public F 176 RecordsSofia, Office, K/1/1202

Records Office, RecordsF Sofia, Office, ecords Office, F 1580K/1/29ecordsSofia, Office,

- 1947 (2004) (inBulgarian) (2004) 1947 , Sofia, , F 176 Sofia, K/11/2562 , F 176 Sofia, K/11/1830 Sofia, F Sofia,

F 176 F 176 K/21/2614 1580 K/1/16 512/1 285K/5/80

/19

The Central PublicThe Records

c RecordsSofia: Office. 184

CEU eTD Collection Към Мария.ВъпросаГеоргиева, 1996. за Неуспешното “Догонващо” Развитие Р. Владикин, 1929. Шестгодини камбиален монопол. Стоян.1924.Бочев, Любен. 1979. Беров, Българо Central RecordsSofia: Office).Public Roumen ed. 2004. 5, Том 1948 culture”. “Bulgarian Foundation science and Center Sofia: for стратегии.либерални ( стопанскоминало. Руменред.Аврамов, Secondary Конституция НароднаРепублика 1947.Constitution на of the People’s България, 1947 Roumen ed. 2004. 1948 5, 1947 Roumen ed. 2004. 4, Том 1930 Bank National (Avramov, народнабанка. Българска Roumen. 1999. ofBulgaria, Republic 1947. Accessed online at the InterwarDemocratic the Period. Review,406 10, of the PeripheralDevelopment Countriesin Southeast Europe and Bulgaria in On(Georgieva, theQuestion1996. Maria. of Catcthe Unsuccessful МеждувоеннияДемократически Период.Преглед,10, 406 Перифернитена Държавии през вЮгоизточна Европа България R. 1929.Six F (Vladikin, of Years Paskalev).Al. Bank National Bulgarian an Institute as ofCredit Issue, and Exchange. Камб AcademyBulgarian of Sciences). Bulgaro 1979. Bulgarian Liuben. Марков, Георги. Науките.ред. на Академия София: Българска ( Междувoeнния Период. . Sofia: CentralSofia: . Public Records Office). CentralSofia: . Public Records Office). иален Институт. literature in Bulgarian: in literature – - – germanskiI Vryzki Otnosheniq Vol.2

1990. София:ЧастПърва. Държавен Централен Архив.( 1990. Част София:Централен 1990. Втора. Държавен Архив.(

ред. Българска 2009. Сборник НароднаБанка. Документи, Том ред. 2009. . 20 ред. –

Bulgarian National Documents Bank. Collected 4, 1930 Vol. . Sofia: . Bank.) National Bulgarian

1947.София: Архив. Държавен Централен (

Фондация наука “Българска изкуство”. София: и за Център 07. БългарскаБанка Народна като Кредитен и Емисионен,

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