Trade and Comecon

Moravska joined COMECON in 1948. The council joins the socialist states in one trading system.

Most trade is a barter. A state agrees to send a good and to receive another good. Money appears only as a unit of account.

The rules [edit]

Five rules govern the trade.

1. The bilateral quota. Two states agree on a list and a quantity for 5 years.
2. The contract price. The price follows a 5-year average of the world market. The average lags 3 to 4 years.
3. The transferable ruble. A unit of account. A state cannot spend it outside the bloc.
4. The balanced book. A state tries to buy as much as it sells. A surplus is a debt that nobody pays.
5. The state monopoly. Only the Ministry of Foreign Trade can sign a contract.

The price problem [edit]

The lagging price helps in a rising market and hurts in a falling market.

The copper price rose until 1974 and fell after it. The oil price rose in 1973 and stayed high. In 1976 Moravska sells cheap copper and buys dear oil. The barter ratio moves against the state.

The state answers with three moves.

1. It sells more copper outside the bloc for hard currency.
2. It cuts the import of consumer goods.
3. It borrows from a Western bank.

The world market route [edit]

The state sells about 9 percent of its copper outside the bloc. The route is indirect.

1. A ship loads copper at Skalina.
2. The ship sails under a foreign flag to Turkey.
3. A trading office sells the copper for US dollars.
4. The dollars go to a bank in Zurich.

The Beirut office had 4 staff. It is closed. The state does not print the route in the trade yearbook.

Danube and rail [edit]

The Danube fleet has 31 tugs and 210 barges. The canal of 1961 joins the river to Medenik. See Geography.

The import that matters [edit]

The state imports three goods that it cannot replace.

• Crude oil. The plants and the fleet need it. A cut stops the country in 3 weeks.
• Coke. The smelter needs it. A cut stops the copper and the export that pays for the oil.
• Cotton. The textile mills need it. A cut leaves 4,000 workers idle.

A shortage in any of the three becomes a political event. See Political System.

Tourism as trade [edit]

Tourism earns a small amount of hard currency. A Western guest pays in dollars at a state hotel. The state calls the income "a non-material export".

The number is small for a reason. The coastal decree of 1963 keeps foreign yachts out of the ports. A Western guest arrives on a charter flight, stays 9 days, and leaves. See The Kray.

A Western guest must stay in a state hotel and must change 20 dollars a day at the state bank. A guest who spends outside the hotel breaks the law.

The smuggler's share [edit]

A trade route creates a private route. Three goods move against the rule.

• Cigarettes and spirits from the ships.
• Foreign currency from the resorts.
• Copper scrap from the plants.

The Kray takes a share of the first two. See Prestizh and the Black Market.

Weak points [edit]

• The state cannot set the world copper price.
• The bloc price lags and it hurts in a fall.
• The hard-currency debt grew 11 percent a year before the games.
• A Western embargo on technology would stop the cable plant upgrade.

Other notes [edit]

• Economy 1976
• Natural Resources
• Merchant Marine Caste