RUSSIA SELLS TO SATELLITES

Press, Volume XCI, Issue 27556, 13 January 1955, Page 7

RUSSIA SELLS TO SATELLITES

JOINT COMPANIES RETURNED

(From a Reuter Correspondent) VIENNA.

Russian sale to Hungary of her share in five joint Hungarian-Soviet companies, has almost completed liquidation of the first post-war phase in Russia’s economic relation with her satellites. The process began on January 1, this year, when Russia sold to the East German Republic the 33 Soviet companies which had controlled industry ahd trade since the war ended.

On September 25, Russia announced that 13 joint stock companies set up in Rumania would be sold back. She also announced the sale to China and to Bulgaria of the joint companies which had rim main industries in those countries. These companies were set up when Communist troops occupied the countries concerned. The general principle was that joint companies were owned and run 50-50 by Russian authorities and local governments. Russia provided as capital the factories, land, mines, or concessions which the Germans had seized or purchased in the country ’concerned. These “former German assets,” had become Russian by the Potsdam agreement, or as reparations/ Their “value was settled arbitrarily by Russia, at inflated prices. The local government had to provide the raw materials, labour, and machinery where not satisfactory. These components would cost normally at least 80 per cent of the basic cost of the product. But the product was shared 50-50 between the local government and the Russians —and the Russians could export without control the whole of their share of the product. These joint companies enjoyed special privileges as regards taxation, prices, labour regulations and so on. They had, in fact, extra-territorial rights. This added to their profits and enabled them rapidly to spread so that they gained in many cases a complete monopoly. Examples of this were the oil production company, Sovrom, in Rumania and civil aviation in all the countries concerned.