Evening star., 1949-08-14

TenCly at play III Europe, udyOc
The governments of Soviet Rus
sia and of the United States are
feverishly active in the conflict OF
ideas: each is attempting to win
friends and followers for its re-
spective social system. The imme-
diate by-product of this theological
combat brought forth warlike
tension and an incipient arma-
ment race, which, in turn, have
had deleterious repercussions on
trade relations between Eastern
and Western Europe. despite their
geographic proximity.
But for the purpose OF this ar
ticle suffice it to observe that one
of the basic cores in this complex
problem can be traced to the de-
liberate deterioration of East West
trade to the detriment of European
economic recovery. Likewise, the
easing of tensions between the
East and the West during the past
few months may be attributed in
a large measure to the fact that
the leaders of both areas have be-
gun to give greater recognition to
dynamics of economic facts of life
the invectives characteristic OF
cold war" Notwithstanding.
Trends in the East
In addition to Soviet Russia
Eastern Europe comprises the fol-
lowing countries: Poland, Czecho-
slovakia, Yugoslavia. Romania
Hungary, Bulgaria, Albania. Fin.
land and the Russian zones OF
Germany and Austria. The pre-.
vailing milieu in each of these
countries is the changing socia
and economic structure currently
taking place. The trend in all o1
them seems to be moving TOWARD
the same paramount objectives
These aims may be summarized a!
follows:
I. To concentrate on industrial.
ization and to enhance the urbar
population. particularly skilled
labor.
2. To develop new industries de.
signed to raise the standards o.
living of all their inhabitants.
3. To bring about basic change
in the pattern of agricultural pro.
duction: (a) To work away from
growing cheap primary foodstuff
(b) move toward processing o1
more expensive farm products; (c)
encourage the sowing of industrial
crops, and I'd to introduce mech
anization on a vast scale.
4. To eventually become inte-
grated into q rdble bloc area de-
signed to enhance their ability tc
pay for their imports from the
West in gold or in dollars.
In the long runs these trends
might modify the traditional pat
tern of trade between Eastern and
Western Europe. But for the pre-
dictable future. Eastern Europe Is
likely to remain the leading source
Of supply of foodstuffs and raw
materials for Western Europe
Concurrently. Western Europe will
probably continue to be the lead
ing source of supply Of manufac-
tured products and industrial
equipment for Eastern Europe.
Reasons for Low Levels
Although there are many i'm
ponderable factors involved In the
East West theological combat, 1t
is possible to adduce factual data
in an attempt to analyze some
Of the underlying causes that act
as deterrents in the restoration OF
East West trade. The low level
of trade between Eastern and
Western Europe has been due, OF
course, to the terrific devastations
and ravages caused by the Second
World War. Agricultural produc-
ton in Eastern Europe has not
yet been completely recovered.
The postwar drive for collectiviza-
ton has served also to retard
recovery with resulting limitations
on the amount of goods available
for export.
Similarly, exports from Western
European countries have been
limited by the general shortage OF
capital equipment and by indus
trial products desired by Eastern
European countries. and by the
absence of any considerable credit
or other means of financing a vol
ume of exports from Western Eu-
rope. Obviously, even in prewar
years, exports from Western to
Eastern Europe have always ex-
ceeded exports from Eastern to
Western Europe. According to
ECA estimates, total imports from
Eastern Europe in 1852 will ap-
proximate 10 per cent Of aggre-
gate Western imports: whereas ex-
ports from Western to Eastern
Europe will approximate IS per
cent of aggregate Eastern imports.
In 1s48 Western exports increased
only moderately, while Eastern ex-
ports rose appreciably but were
still only about 40 per cent Of the
prewar level.
1t follows, therefore. that with
out extensive loans and credits
the coveted Western exports to
Eastern Europe will be greatly
limited and European recovery
will be retarded accordingly. For.
it is unlikely that the United
States will lower its tariff walls
and import greater volumes of
Western European products with
In the foreseeable future.
Equally important is the fact
that the quantity of goods avail
able for exchange in Eastern Eu-
rope Is limited. Hence really
significant expansion of trade
would require q substantial in
crease in production in Eastern
Europe in those types Of goods for
which there exists q long-term
demand in Western Europe.
Thro,ch the sAriex of "hilateral''