The 1940 German–Soviet Commercial Agreement (; also known as Economic Agreement of 11 February 1940 Between the German Reich and the Union of Soviet Socialist Republics) was an economic arrangement between the Soviet Union and Nazi Germany signed on 11 February 1940. In it the Soviet Union agreed in the period from 11 February 1940 to 1941, in addition to the deliveries under German–Soviet Commercial Agreement, signed on 19 August 1939 to deliver commodities (oil, raw materials, and grain) to the value of 420 to 430 million Reichsmarks.

A policy on the transit through Soviet territory of third countries' commodities purchased by Germany was later agreed. The countries followed up the agreement and resolved other issues with the 10 January 1941 German–Soviet Border and Commercial Agreement. In June 1941 Germany invaded the Soviet Union in violation of the 1939 Molotov–Ribbentrop Pact, and all economic agreements between the two countries ended.

Between January 1940 and date of the German invasion, the USSR exported goods of a total estimated value of 597.9 million Reichsmarks to Germany. German deliveries amounted to 437.1 million Reichsmarks. The agreements continued German–Soviet economic relations and resulted in the delivery of large amounts of raw materials to Germany, including over () of oil, () of grain and () of manganese ore.

The Soviet Union received the incomplete naval cruiser , the plans to the battleship , information on German naval testing, "complete machinery for a large destroyer", heavy naval guns, other naval gear, and samples of 30 of Germany's latest warplanes, including the Bf 109 and 110 fighters and Ju 88 and Do 215 bombers. The Soviet Union also received oil and electric equipment, locomotives, turbines, generators, diesel engines, ships, machine-tools, and samples of Germany artillery, tanks, explosives, chemical-warfare equipment, and other items.

Raw materials that Germany had obtained from the Soviets through the 1940 agreement supported the German war effort against the Soviet Union from 1941. In particular, the German stocks of rubber and grain would not have sufficed to support the invasion of the USSR if the Soviets had not already exported these products to Germany.

Background

Prior to 1939

The German–Soviet Economic Agreement of 12 October 1925 formed the contractual basis for trade relations with the Soviet Union. In addition to the normal exchange of goods, German exports to the Soviet Union from the very beginning utilized a system negotiated by the Soviet Trade Mission in Berlin by which the Soviet Union was granted credits for the financing of additional orders in Germany, for which the Trade Mission had to negotiate bills of exchange payable in Reichsmarks.

Trade with Soviet Union, promoted by the first credit operations, led to a brisk exchange of goods, which reached its highest point in 1931. In the early 1930s, however, Soviet imports decreased as the more isolationist Stalinist regime asserted power and dwindling adherence to the disarmament requirements of the Treaty of Versailles decreased Germany's reliance on Soviet imports. In addition, the rise to power of the Nazi Party increased tensions between Germany and the Soviet Union.

In the mid-1930s, the Soviet Union made repeated efforts to reestablish closer contacts with Germany. The Soviets chiefly sought to repay debts from earlier trade with raw materials, while Germany sought to rearm, and the countries signed a credit agreement in 1935. the "Fourth Credit Operation, Special Transaction of 1935", was concluded on 4 April 1935. It placed at the disposal of the Soviet Union until 30 June 1937 200 million Reichsmarks of credits to be repaid during the period from 1940 to 1943. The Soviet Union utilized 183 million Reichsmarksthis of this credit. The preceding credit Operations were liquidated, except for five million Reichsmarks, which were to be repaid in 1938.

Tensions increased because of Germany's support for the Fascist Spanish Nationalists in the Spanish Civil War, while the Soviet Union supported the partially socialist-led Spanish Republic government.

Economic reconciliation was hampered even further by political tension after the Anschluss in mid-1938 and Hitler's increasing hesitance to deal with the Soviet Union. Soviet exports to Germany fell to 47.4 million Reichsmarks in 1937 (approximately one fifth of the 1934 total) and 52.8 million Reichsmarks in 1938. In short, the important trading relationship between the countries that existed in the 1920s essentially collapsed with Hitler's rise to power.

Throughout these years, the bulk of the imports from the Soviet Union consisted of raw materials equivalent to foreign exchange. For example, in 1937, 95 percent of imports from the Soviet Union were raw materials. Germany lacked natural supplies of several key raw materials needed for economic and military operations. In 1938, two-thirds of German oil supply came from the United States and Latin America, while 52 percent of German steel used imported iron ore originating from Sweden. Germany's imports by countries (in Million of Reichsmarks) were as follows: Soviet UnionPoland & Danzig Finland Estonia Latvia Lithuania United States United Kingdom South American countries193693.2 74.0 46.1 13.8 33.2 9.1232.2N/A536.5193765.1 80.7 70.1 23.7 45.7 17.2281.9308.6850.3193847.4 109.4 88.6 24.0 43.5 27.6404.6282.7809.7

Resource requirements Because of the lack of German natural resources, German planners in May 1939 feared that a cessation of Swedish trade would cut key iron ore supplies. In addition, were Russian supplies cut off, German planners estimated that they would need to find substitutes for approximately () of manganese and almost (2 million short tons; ) of oil per year. Germany already faced severe rubber shortages because of British and Dutch refusals to trade with Germany. On 8 May, German officials produced new planning figures estimating that Germany possessed oil stocks totaling only 3.1 months of usage.

In August, as Germany planned to invade Poland and prepared for an eventual war with France, German war planners estimated that, with an expected British naval blockade, if the Soviet Union became hostile, Germany would fall short of its war mobilization requirements by (9.9 million short tons; ) of oil and () of manganese. At that time, Germany possessed only two to three months of rubber stocks and three to six months of oil stocks. Because of the expected naval blockade, the Soviet Union would become the only potential supplier for many items.

Events leading up the negotiations

During mid-1939, the Soviet Union discussed the entry of a political and military pact with contingents representing France and Britain, while also discussing a potential deal with Germany.

In early August, Germany and the Soviet Union finalized the terms for an economic agreement, but the Soviets delayed executing that agreement until the terms of the political agreement with Germany were finalized. On 19 August, Germany and the Soviet Union signed a trade agreement providing for the trade of certain German military and civilian equipment in exchange for Soviet raw materials. The agreement provided that Germany would accept 200 million Reichsmark in new orders over seven years with an effective interest rate of 4.5 percent and would export 60 million Reichsmark in "current business" (trade covered by earlier agreements), 180 million Reichsmark in "new business" and another 200–300 million Reichsmark in repayment for old and new credits. The credit line was to be used during the next two years for purchase of capital goods (factory equipment, installations, machinery and machine tools, ships, vehicles, and other means of transport) in Germany and was to be paid off by means of Soviet material shipment from 1946 onward.

Four days later, the Soviet Union and Germany signed the Molotov–Ribbentrop Pact, an agreement of mutual non-aggression between the parties. The Molotov–Ribbentrop Pact contained secret protocols dividing the states of Northern and Eastern Europe into German and Soviet "spheres of influence". At the time, Stalin considered the trade agreement to be more important than the non-aggression pact. One week after the Molotov–Ribbentrop Pact, the partition of Poland commenced with the German invasion of western Poland.

On 17 September, the Red Army invaded eastern Poland and occupied the Polish territory which held up to 70 percent of Poland's prewar oil production. In October 1939, three German trade partners—Estonia, Latvia, and Lithuania—were given no choice but to sign a so-called Pact of defense and mutual assistance which permitted the Soviet Union to station troops in them.

Negotiations

German plans and expectations Hitler's pressing for a German invasion of Poland in 1939 placed tremendous strain on the German war machine, which had been gradually gearing up after the Treaty of Versailles restrictions for total war in 1942 or 1943. The German navy was critically short of maritime and military assets and did not achieve full mobilization until 1942. Even Germany's quick victory in Poland strained its 1939 military resources, as Germany possessed only six weeks of munitions supplies and no considerable manpower reserve. Germany's lack of raw materials meant that it had to seek increased supply from outside. However, the British blockade left Germany increasingly desperate for materials. The only remaining state capable of supplying Germany with the oil, rubber, manganese, grains, food fats, and platinum it needed was the Soviet Union.

Germany needed more of an economic alliance for raw materials than the economic partnership that the 19 August 1939 agreement provided. At the same time, the Soviet demands for manufactured goods, such as German machines, was increasing while its ability to import those goods decreased because many countries ceased trading relations after the Soviet entry into the Molotov–Ribbentrop Pact. The Soviet Union could offer precious little technology, while Germany possessed the technology the Soviet Union required to build a blue-water fleet. Accordingly, for the six weeks following the Soviet and German invasions of Poland, Germany pressed hard for an additional agreement.

On 14 and 15 September 1939, German foreign minister Joachim von Ribbentrop outlined a program for his negotiations in Moscow.Documents on German Foreign Policy 1918-1945 Series D (1937-1945) Volume VIII The War Years September 4, 1939-March 18, 1940, United States Government Printing Office Washington * 1954 It included attempting to obtain 180 million additional Reichsmarks in raw material and discovering whether the Soviet Union "could and would compensate for the loss in Imports by sea" following the British blockade. Ribbentrop foresaw the negotiation as "a test of whether and how far Stalin is prepared to draw practical conclusions from the new political course". Ribbentrop concluded that "The raw materials deliveries requested by us can only be carried out, in view of the unsatisfactory domestic supply situation of Russia, at the expense of their own Russian consumption."

Events following the division of Poland

The Soviet alliance resulted in a huge military benefit to Germany, which thereafter needed to station only four regular and nine territorial divisions on its eastern border, permitting it to commit the remainder of its forces westward. The pact also avoided at the outset the two front war, or "encirclement", that Germans had feared since the late 19th century, and against which Germany was not then prepared to fight.