The German–Soviet border and commercial agreement

On 10 January 1941 in Moscow, representatives of the Soviet Union and the Third Reich signed a whole package of agreements intended to settle the matters left over from a year and a half of cooperation between the two dictatorships. The Chairman of the Council of People’s Commissars and People’s Commissar for Foreign Affairs, Vyacheslav Molotov, and the German ambassador, Friedrich-Werner von der Schulenburg, put their signatures to a treaty on the frontier “from the Igorka river to the Baltic Sea” and to a secret protocol in which Germany renounced the strip of Lithuanian territory promised to it in 1939 in exchange for 7.5 million gold dollars. The People’s Commissar for Foreign Trade, Anastas Mikoyan, and the head of the German economic delegation, Karl Schnurre, signed an agreement on mutual deliveries in the second period of the economic agreement of February 1940, extending the exchange to 1 August 1942. Separate agreements governed the departure of Germans from Lithuania, Latvia and Estonia and the settlement of their property. The Soviet press announced them on 11 January in three communiqués, couched in a tone of “mutual understanding and trust”.

Popular chronologies speak of a single “German–Soviet border and commercial agreement”. In reality there were several separate documents signed on the same day by different people, and the most interesting of them, the protocol on the Lithuanian strip, remained secret until the end of the war. All of them were concluded at a time when, on the German side, the decision for war with the Soviet Union had already been taken. Three weeks earlier Adolf Hitler had signed Directive No. 21, the plan for Barbarossa.

The strip beyond the Šešupė

The question of the Lithuanian strip had dragged on since September 1939. When Joachim von Ribbentrop and Molotov signed the Boundary and Friendship Treaty in Moscow on 28 September, Germany ceded Lithuania to the Soviet sphere of interest in exchange for the Lublin region and part of Masovia, but reserved a sliver of its territory for itself. A secret additional protocol stipulated that if the Soviet Union took “special measures” in Lithuania to protect its interests, a strip of land in the south-west of the country, on the left bank of the Šešupė, would fall to the Reich. This was a portion of the Lithuanian part of the Suwałki region adjoining East Prussia, including the area around Vilkaviškis.

As early as October 1939 the matter proved awkward. Joseph Stalin, when presenting his demands for bases to the Lithuanian foreign minister, also told him to hand this strip over to Germany, which shocked the Lithuanians. Berlin preferred not to antagonise Kaunas and on 4 October instructed Schulenburg to ask Molotov not to mention the strip for the time being. On 8 October Molotov gave a written assurance that if Soviet troops entered Lithuania they would not occupy the area reserved for Germany, and that Berlin would decide when it was to be handed over.

The promise did not survive 1940. On 15 June the Red Army occupied the whole of Lithuania, including the strip beyond the Šešupė, and in August the country was incorporated into the USSR. On 13 July Molotov summoned Schulenburg and declared that Stalin regarded Germany’s right to the strip and the Soviet obligation to cede it as “indisputable”, but that in the present circumstances the cession would be “extremely inconvenient and difficult” for the Soviet government. He therefore asked that Germany, “in keeping with the exceptionally friendly relations” between the two states, allow the area to remain with Lithuania – in practice, with the Soviet Union. The population of German origin, he added, could be resettled at any time, including from the strip itself. Schulenburg advised treating the request as a bargaining counter in economic and financial matters in the Baltic states. Berlin replied that it first wanted to know what it would receive in return.

On 12 August Molotov handed the ambassador a memorandum: territorial compensation was out of the question, but the USSR could pay, within two years, in gold or in goods, 3,860,000 gold dollars – half of what the United States had paid Russia for Alaska. The Germans found the offer unacceptable. In September Schulenburg conveyed that the Reich was prepared “in principle” to give up the strip for “appropriate compensation”, and Molotov had him repeat the sentence several times. During his visit to Berlin in November 1940 he reminded Hitler that Moscow was still waiting for a clear answer.

The secret protocol of 10 January 1941 ended the haggling. In its first article the Reich government renounced its claim to the strip of Lithuanian territory referred to in the protocol of 28 September 1939 and marked on the attached map. In the second, the government of the USSR undertook to pay 7,500,000 gold dollars for it, equivalent to 31,500,000 Reichsmarks. One-eighth of the sum, 3,937,500 Reichsmarks, Moscow was to pay within three months in deliveries of non-ferrous metals, and the rest, 27,562,500 Reichsmarks, in gold, by offsetting it against the gold payments that Germany was due to make to the Soviet Union by 11 February 1941 under the Schnurre–Mikoyan correspondence. The protocol was drawn up in two German and two Russian copies and entered into force on signature. The price was almost twice the first Soviet offer and somewhat higher than the sum paid for Alaska in 1867. No one asked the Lithuanians, or the inhabitants of the strip, for their opinion.

The frontier from the Igorka to the Baltic

The public border treaty concerned a stretch not covered by the agreements of 1939. The German–Soviet frontier of 28 September 1939 began at the junction with Lithuania, and further north the Reich bordered on the independent Lithuanian state. After the annexation of Lithuania the same line became Germany’s border with the Soviet Union and had to be fixed anew. The treaty drew it from the small river Igorka (PL), a tributary of the Czarna Hańcza, where the 1939 section ended, to the Baltic Sea. According to the Soviet communiqué the border followed the former de facto state frontier between Lithuania and Poland, that is, along the German-occupied Suwałki region, and then the German–Lithuanian frontier laid down in the agreements of 1928 and 1939. The second of these was the agreement of 22 March 1939 in which Lithuania, under pressure, ceded Klaipėda (Memel) and its district to the Reich. The Soviet Union, having incorporated Lithuania, thereby also accepted the seizure of Klaipėda.

The strip beyond the Šešupė remained on the Soviet side, but the details were disputed for several more months in a mixed border commission. The Soviet delegates wanted to draw the frontier in the Suwałki region according to the decision of the Conference of Ambassadors of 1923, which had confirmed the Polish–Lithuanian border; the Germans wanted to follow the line that existed in practice. Only on 15 April 1941 did the Secretary-General of the People’s Commissariat for Foreign Affairs, Arkady Sobolev, announce that Moscow accepted the German position, which the German chargé d’affaires regarded as a “most remarkable” concession. Hitler signed the instrument of ratification in May 1941, and officials of the German Foreign Ministry noted at the time that the work of the border commission should be deliberately spun out.

The last departure of the Germans from the Baltic

Two resettlement agreements, signed on behalf of the USSR by V. B. Bochkaryov (for Latvia and Estonia) and N. G. Pozdnyakov (for Lithuania), allowed Reich citizens and persons of German nationality from the three new Soviet republics to leave for Germany within two and a half months. In the other direction, Lithuanians, Latvians, Estonians, Russians and Belarusians living on German territory, chiefly in the Klaipėda district and the Suwałki region, could move. A third agreement, signed by the Deputy Chairman of the Council of People’s Commissars, Andrei Vyshinsky, and Schnurre, dealt with property claims connected with the resettlement. The Germans, who in 1939–1940 had lost businesses, land and capital in the Baltic states, demanded compensation, while Moscow presented its own bills for Soviet property in territory under German occupation.

This was the second wave of the “Heim ins Reich” operation. Most Baltic Germans had left Estonia and Latvia in the autumn of 1939, under agreements concluded with the governments of the still independent states, and had been settled mainly in the Warthegau and in Pomerania, often in the homes and farms of expelled Poles. Between late January and March 1941 those who had stayed behind then left: according to German studies, about 7,000 people from Estonia and 10,000 from Latvia, and some 50,000 from Lithuania, whose Germans were included in resettlement for the first time. Among those leaving were also Estonians, Latvians and Lithuanians who passed themselves off as Germans or Protestants simply to get out of the USSR. The resettlers were sent to camps where SS officials of Heinrich Himmler’s apparatus assessed their “racial value”. Those judged suitable for “settlement in the East” were assigned to colonise the conquered lands; the rest were sent to work in the Reich.

“The biggest agreement Germany had ever concluded”

The economic negotiations that led to the agreement of 10 January had been going on since the end of October 1940 and were difficult. The February 1940 agreement provided that after a year the two sides would settle deliveries for a further period. Germany, which during the first year had fallen behind with its deliveries of machinery and military equipment, needed Soviet raw materials more than ever: stocks of rubber, oil and grain were dwindling, and the British blockade cut it off from overseas suppliers. Moscow linked commercial questions with political ones. It demanded that all the disputed issues be settled at once, from the Lithuanian strip to compensation for property in the Baltic states and a share in nickel mining at Petsamo, and when Berlin failed to reply to its conditions for joining the Tripartite Pact of 25 November, the talks hardened still further. According to the American historian Edward E. Ericson, the negotiators of the two sides at one point nearly came to blows.

The agreement finally signed extended the exchange to 1 August 1942. According to the most frequently cited calculations, based on German documents, the Soviet Union was to supply goods worth 620–640 million Reichsmarks during this period, considerably more than in the first year. Moscow undertook to supply grain, crude oil, cotton, ores, non-ferrous and precious metals, and to continue transporting across Siberia goods bought by Germany in the Far East, above all rubber. In return Germany was to supply industrial machinery and equipment and armaments, including completing the fitting-out of the cruiser Lützow, sold in 1940, which lay at Leningrad under the name Petropavlovsk. Schnurre called the agreement the biggest Germany had ever concluded, and Ambassador Karl Ritter wrote in his instructions that the Soviet Union had concluded with Germany “the biggest contract in history between two states”.

Implementation of the agreement began slowly. According to Schnurre’s memorandum of 5 April 1941, Moscow dragged its feet over deliveries in January and February, which he attributed in part to the cooling of political relations: in January the Reich received raw materials worth 17 million Reichsmarks, in February 11 million, mainly grain from Bessarabia. In March deliveries rose sharply. A contract was signed for 1.4 million tons of grain, and Soviet trains carrying oil, manganese ore and metals rolled into Germany without a break. Schnurre noted at the same time that Germany would be unable to meet the later deadlines for its own deliveries because of labour shortages and the priority given to military programmes. It did not have to worry about that for long.

17 January: Molotov asks for an answer

A week after the agreements were signed, Molotov decided that, now the most important economic matters had been settled, it was time to return to politics. On the afternoon of 17 January he summoned Schulenburg and declared that the Soviet government was surprised not yet to have received any reply to its position of 25 November on the questions raised during the Berlin talks, and counted on an early answer. The Soviet offer is often dated 26 November. Molotov read it out to Schulenburg on the evening of 25 November, and the ambassador cabled it to Berlin during the night, by then 26 November. Schulenburg replied that there was “not the slightest reason” for surprise, since these were matters that first had to be thoroughly discussed with Italy and Japan. Once those consultations were over, the Soviet government would certainly learn the German position.

Molotov then turned to the Balkans, and Schulenburg passed his statement on to Berlin “word for word”. According to all the information available in Moscow, large German forces had been massed in Romania, ready to enter Bulgaria in order to occupy it, Greece and the Straits. Britain would certainly try to forestall them, seize the Straits and, together with Turkey, attack Bulgaria, which would become a theatre of war. The Soviet government had repeatedly stated that it regarded the territory of Bulgaria and the Straits as the USSR’s security zone, and therefore considered it its duty to warn that it would regard the appearance there of any foreign armed forces as a violation of the Soviet Union’s security interests. That same day an identical statement was made in Berlin to the State Secretary, Ernst von Weizsäcker, by the Soviet ambassador, Vladimir Dekanozov.

The warning had grounds. Since the beginning of January strong German formations had been travelling through Hungary to Romania, and on 7 January Ribbentrop confidentially informed the missions in Moscow, Ankara, Belgrade and Athens that the need to drive the English out of Greece completely had to be seriously reckoned with, and instructed that the “present vagueness” about troop numbers be maintained for the time being. Schulenburg, who reported on 8 January on rumours circulating in Moscow of 200,000 troops, was instructed not to raise the matter himself and, if asked, to reply that these were purely precautionary measures against Britain. That is how he answered Molotov on 17 January.

Berlin’s reply, drafted by Ribbentrop at his residence at Fuschl, was handed by Weizsäcker to Dekanozov on 22 January and read out by Schulenburg to Molotov on 23 January. The Reich had no information that Britain intended to seize the Straits, but it knew that the British were establishing themselves in Greece, and this Germany would not permit. It had no intention of occupying the Straits, but if there were operations against Greece its troops would pass through Bulgaria, which in no way infringed Soviet interests and indeed served them. As for the political talks, Berlin repeated that it stood by the ideas put to Molotov in November and was consulting Italy and Japan, after which it hoped to resume talks “in the near future”. Molotov understood from this that the march through Bulgaria had already been decided, although it was to take place only if the British extended their operations in Greece, and he repeated that Bulgaria and the Straits were a Soviet security zone.

The consultations with the allies that Schulenburg invoked were a pretext. Hitler had no intention of answering the Soviet conditions, because war with the Soviet Union had already been decided. At a conference at the Berghof on 8–9 January he called Stalin a “cold-blooded blackmailer”, and in conversation with Benito Mussolini on 19–20 January he spoke of Russia as a threat without revealing the Barbarossa plan to him. The ambassador who assured Molotov that consultations were under way had not been let into the secret of Barbarossa and was among the opponents of war with the Soviet Union.

Place in the war

The agreements of 10 January 1941 were the last major treaties between the two dictatorships, and they show most clearly how differently the two states regarded their cooperation. For Stalin they were proof that the pact with Hitler was working: Moscow had bought peace on its new frontier, kept the whole country it had seized in the summer of 1940, and could still count on German technology. For Hitler they were a way of drawing on Soviet raw materials until the last moment without revealing his preparations for invasion. German deliveries fell further and further behind, while Soviet ones arrived punctually. In a memorandum of 15 May 1941 Schnurre recorded that since the beginning of the year the Reich had received from the USSR, among other things, 632,000 tons of grain and 232,000 tons of oil, and that the Russians were fulfilling the agreement even though it was a great burden for them. At Leningrad some seventy German engineers and fitters were working on completing the cruiser Lützow.

In the Balkans Germany did exactly what Molotov had warned against. On 1 March 1941 Bulgaria joined the Tripartite Pact, and the next day German troops began crossing the Danube. Moscow confined itself to a protest. No reply to the Soviet conditions of November ever came. In April Germany attacked Yugoslavia and Greece, and on 22 June 1941 it crossed the frontier drawn in Moscow six months earlier, including the border from the Igorka to the Baltic, and launched Operation Barbarossa. Soviet trains loaded with raw materials were travelling west until the last hours before the attack. According to Ericson’s calculations, based on German data, without deliveries from the USSR Germany’s stocks of oil, rubber, manganese and grain would have been exhausted within a few months of war in the East.

The strip beyond the Šešupė, sold to Moscow for 7.5 million dollars, was occupied by the Wehrmacht in June 1941, and with it the whole of Lithuania. Some of the Germans resettled from Lithuania at the beginning of 1941 were sent back there by the Reich authorities in 1942–1943, this time as settlers on land taken from Lithuanians, Poles and Belarusians. Schulenburg, who had signed the agreements of 10 January, warned against war with the USSR in the spring of 1941. Later linked to the German opposition, he was arrested after the 20 July plot of 1944 and executed in Berlin on 10 November 1944. The secret protocol on the Lithuanian strip, published by the US State Department in 1948 together with other German Foreign Ministry documents, became one of the proofs that the arrangement between Hitler and Stalin was a bargain over the lands and peoples of third countries, settled in gold to the last Reichsmark.