534 



high-technology products and, for a time, the services of foreign engi- 

 neers were permitted to meet high-priority, short-run needs, minimum 

 reliance on the non-Communist world economy was a primary indi- 

 cator of economic success. Throughout his rule, Soviet Party Leader 

 Joseph Stalin adhered to the principle that the world was divided into 

 two hostile camps — the capitalist and socialist economic and political 

 systems. 



The Soviet leadership's ideological hostility toward the United 

 States and the unresolved issue of Tsarist and Russian Provisional 

 Government debts (which Soviet leaders refused to pay) inhibited 

 economic relations between the two countries. The situation was 

 exacerbated by a sharp fall in the world market prices for Soviet raw 

 materials, which accounted for most of Soviet exports to the United 

 States. Despite these problems, the establishment of diplomatic rela- 

 tions in 1933 and the signing of bilateral trade treaties in 1935 and 

 1937 provided the basis for some expansion of trade. However, the 

 Soviet Union's general pattern of autarkical foreign trade and isola- 

 tion from the West did not change. 



The interwar policies were interrupted only temporarily by Soviet 

 alliances with Western countries during World War II. Expectations 

 that the wartime alliance might be followed by peacetime cooperation 

 proved unfounded. Discussions of U.S. aid and credits to the Soviet 

 Union and Soviet participation in a now multilateral world economic 

 system came to an end with the emergence of the Cold War. The 

 Soviet leadership's suspicion of Western "capitalist" countries and the 

 Soviet predilection for comprehensive planning and control of the 

 domestic economy probably led them to revert to a deliberate policy 

 of economic independence. The economic isolation of the U.S.S.R. 

 from the West reached a peak in the early 1950's, when less than 20 

 percent of its foreign trade was conducted with countries outside the 

 Communist area. 



In the late 1950's and throughout the 1960's attitudes toward U.S.- 

 Soviet trade gradually changed in both countries. In the Soviet Union, 

 the post-Stalin leadership began actively to seek business deals with 

 Western industrial countries. Soviet Party Leader Nikita Khrushchev, 

 in his travels abroad, personally lobbied for improved economic rela- 

 tions. Typical was his appearance at the Leipzig Trade Fair in 1959, 

 where he presented himself as a businessman rather than a political 

 leader. The West European countries and Japan took advantage of 

 this economic opening to the East. Reduced trade restrictions, liberal 

 credit policies, and participation in joint industrial ventures allowed 

 them rapidly to expand their trade with the Soviet Union and other 

 East European countries. The attitudes of U.S. policymakers toward 

 East-West trade, however, tended to be more sensitive to political 

 differences with the Soviet Union. The Cuban crisis, the Vietnam War, 

 and the invasion of Czechoslovakia set back efforts to improve eco- 

 nomic ties with the Soviet Union. 



In spite of the unfavorable political climate, small but significant 

 steps were made to remove some of the impediments to IT. S. -Soviet 

 trade. Several administrative changes, such as loosening export con- 

 trols and extending credits for Soviet agricultural purchases from the 

 United States, facilitated a gradual increase in U.S. -Soviet trade dur- 

 ing the 19fi(Vs. Moreover, the rationale for East-West trade restrictions 



