That Adolf Hitler's mid-1940 decision to attack the Soviet Union foreshadowed what was to become his “true war”—one driven by ideology and bent on annihilation—is now widely agreed upon by historians, and any “preventive war” apologias have been effectively refuted.Footnote 1 Adam Tooze's economic reinterpretation of the Third Reich's history has nevertheless added a different perspective to this orthodox account. Following Tooze, Operation Barbarossa, as the assault in the East was code-named, was a desperate reaction to the deteriorating strategic position of the Third Reich. Despite swift victories on the battlefields of western and northern Europe, the German war machine had not lived up to the regime's expectations. Not only had Britain withstood the Luftwaffe's efforts to pave the way for an invasion of the British Isles, but the United States had also entered the war—at least, at this point, on the economic front. The “Cash and Carry” Act of November 1939, the subsequent American armaments program, and the Lend-Lease Act in the spring of 1941 all signaled Washington's commitment to resist Germany's claims for hegemony. The balance of economic power thus swung to the side of the Western Allies.Footnote 2
As a consequence, the Nazi regime needed to regain momentum. Launching an attack on the USSR might have seemed ill-advised, given the stretching of German forces that such a move would entail, but it was plausible within the framework of a “consistent if perhaps ‘mad’ logic”: war against yesterday's ally was as inevitable with regard to the attainment of European supremacy as it was desirable with respect to the long-term goal of securing living space in the East.Footnote 3 Moreover, the USSR was widely believed to be capable of solving Germany's pressing problems: a quick victory would leave Britain with no potential allies on the continent, and Soviet resources would complement the European Großwirtschaftsraum (economic sphere) dominated by Germany—and thus help to defeat the Anglo-American alliance. In essence, it was a true game of Russian roulette: either it all would work out and the Third Reich would triumph, or the very plan aimed at securing victory would lead to utter failure.Footnote 4 Hitler's gamble ultimately failed, and the fall of the “house built on sand,” as Gerald Reitlinger called the German occupation in the East, led to the destruction of the Third Reich.Footnote 5
At first glance, this seems to be a straightforward story: blinded by ideology, notably the belief in Slavic inferiority, the Nazi regime first underestimated the Soviet capacity for resistance and, at the same time, overestimated the benefits of occupation. It then ruined what chances it had to win by mismanaging the conquered country's economy in every possible sense. But why was the German perception of the Eastern territories so flawed, despite the long and extensive preparations for the onslaught—or was it? And how did German policymakers attempt to combine—rather than choose between—the ideological imperatives of a Weltanschauungskrieg (ideological war), on the one hand, with the material demands of a protracted, all-out economic war, on the other?Footnote 6
These questions will be addressed by looking at the case of Ukraine, which stood at the center of German planning—and with good reason.Footnote 7 In the first place, it was the economic heartland of the European portion of the Soviet empire, making it attractive for a number of reasons: its agrarian abundance, as well as its future industrial potential. In addition, it was the gateway to the Caucasian oil fields. As a result, the economic war in the East was a war both for and in Ukraine. At the same time, the case of Ukraine helps explain why misguided plans were drawn up in Berlin in the first place, how they were implemented, and what their consequences were for both occupiers and occupied.Footnote 8
Because this article draws on German archival sources, it focuses on the German perspective—a point that deserves emphasis: historiography frequently tends to neglect the short- and long-term effects of occupation on the affected regions, as well as the responses to occupation by the local population.Footnote 9 It is essential not to overlook the influence of the fifty million people living in the occupied territories on the course of the occupation, the degree to which they supported or challenged German rule, and the ways in which they took action. In other words, it is important to credit the local population with agency.Footnote 10 Also surprisingly scarce are analyses of the German protagonists who were present—military and economic agencies, as well as private companies—and their contribution to shaping the occupation and exploitation of the region. In short, the interplay between Berlin and the Eastern territories is frequently underestimated, giving the impression of centralized, homogenous planning, often with a touch of “professionalism,” when it comes to the economic side of German rule.Footnote 11 This article argues instead that the concept of a simple antagonism between ideology and economic rationale is an inadequate construct. It was precisely the combination of the two that accounted for the destructive dynamics of the occupation of Ukraine, as well as for the flaws in—and gains from—economic exploitation.
Great Expectations? Planning War and Occupation
When the Wehrmacht invaded the USSR in June 1941, Germany tried to take by force what it had previously obtained by trade—and even more. Since the attack on Poland and the beginning of the Allied blockade two years earlier, the Reich had been forced to reorganize its foreign trade. German-Soviet commerce had surged massively as a result of the Hitler-Stalin Pact of August 1939, and of the attached secret protocol dividing spheres of interest in Eastern Europe. By the time Operation Barbarossa was launched, the USSR had become the Third Reich's most important source of raw materials. This did not mean that Hitler's early triumphs had been made possible courtesy of Joseph Stalin's deliveries.Footnote 12 But it did show that the concept of a European Großraumwirtschaft—which built on traditional notions, entertained by Nazi functionaries and conservative elites alike, of German hegemony in central and southeastern Europe—had not lived up to expectations.Footnote 13 Despite the enormous resources commanded by Germany in the occupied territories and the access to trading partners from Sweden to Spain, the European subcontinent could not compensate for the loss of overseas trade. Essential raw materials such as chromite ore from South Africa or molybdenum and cotton from the United States needed to be procured elsewhere. Moreover, the combined productive capacities of the British Empire and North America far surpassed those of the Axis powers, even with the latter in control of a large portion of European resources.Footnote 14 An entire continent was thus required for the inevitable “battle of continents” foreseen by Hitler, and the only one at hand was the Eurasian landmass, large parts of which were controlled by the Soviet Union.Footnote 15 Three different motivations for an attack on the USSR thus conveniently blended together: an assault on “Judeo-Bolshevism,” the ideological archenemy; the belief that a Soviet defeat would demoralize Britain; and the hope of breaking free from the confines of the German war economy.Footnote 16
Despite these grandiose visions, the actual plans remained surprisingly narrow and limited: European rather than Eurasian, local rather than global. In December 1940, Directive No. 21, which set out in broad terms the tenets of Operation Barbarossa, made these deficits plain to anyone who bothered to look. German troops were to advance to an imaginary line from Arkhangelsk in the north to the Volga River delta in the south, but no further. This was obviously a daunting military venture that required troops to move well over 750 miles in a couple of weeks, but it was shortsighted in economic terms. The metropolitan centers of Moscow and Leningrad, as well as the Donets Basin (Donbas) in Eastern Ukraine, were to be captured, but the large industrial agglomeration in the Ural Mountains was not. Instead of being occupied, it was to be destroyed by air raids to rob the Soviet Union of its allegedly last industrial hub.Footnote 17 Four aspects of this document are striking—besides the sweeping assertion that all of the required “daring operations” would materialize according to plan.Footnote 18 First, Directive No. 21 did not clarify the precise fate of the occupied industries, which left substantial room for interpretation. Second, the existence of industrial strongholds in the Asian part of the Soviet Union was by and large ignored. Third, the Ural Mountains were to be subjected to a strictly negative policy, i.e., the German campaign aimed at destroying the region's war potential as a means of securing short-term victory, rather than at adding those resources to its own in the long run. Fourth, the directive failed to acknowledge that an attack on the Soviet Union, at least within the given geographical parameters, was not the answer to all the problems that Germany faced.Footnote 19 These deficits were glossed over by a double premise: that Soviet resistance would be crushed rapidly, and that Ukraine would, as the economic heartland of the European part of the USSR, provide key resources—grains, oil, and minerals—to help attain overall victory. The breadbasket of Western Ukraine and the mining pits of Eastern Ukraine would together sustain the German war economy, complete the Großwirtschaftsraum, and help counter the effects of the Allied embargo.
Herbert Backe, the de facto head of the German Ministry of Agriculture, is said to have been the major proponent of the theory that Ukrainian resources would alleviate German—or rather Western European—food shortages once and for all. Backe was more cautious than that, however. In a briefing with Hitler, he told the Führer that if there were a territory of any use, it was Ukraine. All other regions within German reach depended on food imports themselves.Footnote 20 Backe also suggested how this net deficit could be turned into the agrarian surplus that Germany was after: by excluding most of northern and central Russia from the distribution of foodstuffs, several million tons would be freed for the Reich proper and for its dependent territories in the West. Backe's simple calculation aimed at nothing less than combining the economic goals of the invasion with the larger intentions of depopulating and deindustrializing Russia in order to secure German hegemony. The remaining parts of the Soviet Union were to provide agrarian products, raw materials, and cheap labor for the Greater German Empire and the prospective new colonial settlements in the East. On May 2, 1941, at an interdepartmental meeting of the undersecretaries involved in the planning of the invasion and occupation, these ideas were condensed into the infamous formula known as the “Hunger Plan,” whereby “tens of millions” of people were doomed to perish in the course of occupation.Footnote 21
Criticism of these plans did not pertain to the genocidal quality of this policy of deliberate mass starvation; instead, it addressed the high hopes placed on the economic benefits of occupying the western USSR. These worries were articulated mostly by the old nonparty elites. Among others, Minister of Finance Lutz Graf Schwerin von Krosigk and Field Marshall Fedor von Bock, who was to head the central army group, raised doubts about the advisability of the attack, specifically questioning Barbarossa's economic rationale. In their eyes, Germany stood to lose in a trade-off between the additional material and human resources required for such an invasion and the likely spoils of war. In addition, the Reich would have to do without Soviet deliveries for some time and would lose transit to the Far East altogether.Footnote 22
General Georg Thomas, head of the Wehrmacht's Armaments Procurement Office, was another one of the initial skeptics. He made an impressive about-face, however, once he understood that Hitler's decision to embark on the Eastern campaign was final. In a memorandum prepared for Hitler in mid-February 1941, Thomas painted a largely optimistic picture of the economic effects of the looming war. In agreement with Backe, whose distinction between surplus and shortage territories he adopted in the section of his memo pertaining to agriculture, Thomas focused on Ukraine as the most important industrial region the regime expected to conquer.Footnote 23 According to the available data, mining in the Donets Basin had contributed 60 percent of all Soviet soft coal, while the nearby fields of Kryvyi Rih had supplied 61.5 percent of the USSR's iron ore. In addition, more than a third of all manganese mined in 1938 had come from Ukrainian pits. Only marginal attention was paid to the fact that the two major heavy industrial hubs along the Dnipro and in the Donbas had accounted before the war for roughly two-thirds of Soviet pig iron and more than 50 percent of all crude steel production.Footnote 24 Thomas might have added that the region's mineral deposits were enormous, and that some forty-five blast furnaces had been in operation in Ukraine in 1938, with several more scheduled for construction in the course of Stalin's third Five-Year Plan (the exact number was unknown to German investigators prior to the invasion). Approximately 1.5 billion tons of highly concentrated iron ore lay under the soil of Kryvyi Rih (59–61 percent Fe) and at least 450 million tons of manganese in the fields of Nikopol' (30 percent Mn) and Zaporizhzhya (26 percent Mn)—not to mention the seemingly endless supplies of both soft coal and lignite (the latter was located mostly in Western Ukraine).Footnote 25
In short, there was much to be gained from exploiting Ukrainian resources, and Thomas concluded by suggesting that German supplies could be improved both in the short and long run. The general did add some cautionary notes, however, effectively leaving open a loophole of sorts in case his optimistic forecast did not pan out. He briefly outlined a set of preconditions for the promised gains, including rapid occupation with little devastation caused by the Soviet forces, a solution to the transport problem, and—in what proved to be a weighty proviso—additional annexation. Realizing that the western parts of the USSR lacked key resources (such as alloys and other non-iron metals apart from manganese, as well as mineral oil), Thomas made his predictions contingent on access to the Ural resources and the oil rigs of Maikop, Groznyy, and Baku.Footnote 26 This was certainly a tall order, but one in line with Hitler's earlier demands to secure the Caucasian oil fields as a precondition for victory.Footnote 27
Thomas argued in favor of large-scale annexation in order to secure a sound economic basis for occupation, but his memorandum was conspicuously silent about the fate of industry in the Western USSR, including some 170 iron and steel plants.Footnote 28 This was no omission: it reflected the intentions of the German planners. Because they counted on a swift military triumph in the East and on the subsequent exploitation of the occupied territories as a provider of agricultural products and raw materials, they seemed to have had no genuine interest in Soviet industry. The manufacturing of finished goods was to be limited to the needs of the German troops and the immediate war effort; but advanced industry in northern and central Russia was not part of the German plan.Footnote 29 In contrast, heavy industry and oil drilling in Ukraine and Transcaucasia would continue, though the extent of those activities had not yet been determined.Footnote 30
The first directives aimed at clarifying these goals remained highly restrictive. In July 1941, Hermann Goering, in his capacity as plenipotentiary for the Four-Year Plan, unequivocally laid out the guidelines: the recently established Wirtschaftsstab Ost (Economic Organization East) was not concerned with reconstruction, but rather with securing supplies and producing essential raw materials.Footnote 31 The top officials of the Wirtschaftsstab, including Thomas, understood what needed to be done. Just days after the directive, they agreed that there was no way to run the local economy in the absence of the communist intelligentsia, who were either dead or gone: “Large territories will have to be neglected (starvation).” In Thomas's words, it made little sense to “run factories merely to employ the population. We cannot feed the people, and we lack metals and coal. [Let us] only restart essential [industries], in particular those producing commodities, or factories of particular significance to the war effort.”Footnote 32 This plan, though seemingly clear-cut, proved hard to implement.
Late Arrival and Early Surprises
Work of a practical nature started in the early days of the campaign, with two organizations taking the lead. The Wirtschaftsstab Ost sent out an armada of so-called Wirtschaftsinspektionen and Wirtschaftskommandos with the task of securing supplies, goods, and equipment in the newly occupied territories; these economic teams were also charged with searching the rear areas of the front for plants and factories that could be used for military purposes. Despite its modest beginnings, the Wirtschaftsstab and its subordinate units had grown into a major organization, commanding by late 1942 some nineteen thousand officials in the territories under military control (along with another fifty-three hundred officials in the provinces of the Reichskommissariat Ukraine administered by civilians).Footnote 33 Goering's July regulation provided for the establishment of the other main organization involved in this endeavor: state-run monopoly organizations, so-called Ostgesellschaften, which claimed sole responsibility for the procurement and disposition of resources in the East. Despite the state's controlling stake, the Ostgesellschaften also coopted private capital and expertise, drawing on the support of the German corporatist economic organizations. Among the first and, by far, the most important of these organizations were the Berg- und Hüttengesellschaft Ost (BHO), the Kontinentale Ölgesellschaft, and the Zentrale Handelsgesellschaft Ost.Footnote 34 It is significant that the personnel of both the Wirtschaftsstab Ost and the Ostgesellschaften had been recruited from a diverse range of occupations, bringing together army officers and farmers, state officials and businessmen, engineers and clerks. Officials frequently served in both organizations simultaneously, as well as in diverse private and state companies, business associations, and other economic institutions of the Third Reich.Footnote 35 The assignment of Paul Pleiger—an official of the Four-Year Plan, head of the state-owned Reichswerke “Hermann Goering,” and leader of the Reichsvereinigung Kohle—as the BHO's chief executive highlighted this practice of overlapping personnel.Footnote 36
Fears that the monopoly granted to the Ostgesellschaften would lead to a centrally planned economy were allayed, in part, by limiting their mission to a time span of three years, and by declaring that their job was not the “economic, colonial exploitation of the East in the long run,” but rather in the interests of the immediate war effort.Footnote 37 Furthermore, it was suggested that private property—though under state supervision—would be reintroduced in the Soviet industrial sector, including the eventual transfer of individual companies and factories to German investors.Footnote 38 Doubts remained, however, forcing Goering to reformulate his directive in May 1942: all assets in the occupied territories would remain state property until the end of the war, but would operate as private businesses to avoid any similarities with Soviet collectivism. Privatization would, in other words, have to wait until the end of the war.Footnote 39
Just how challenging the task was only became clear upon arrival. In contrast to its success on the northern and central parts of the front, the Wehrmacht made much slower progress and did not drive Soviet troops from Eastern Ukraine before September 1941—with fatal consequences for the economic potential of the newly conquered regions.Footnote 40 Instead of securing intact infrastructural and productive facilities, the German occupiers were confronted with a picture of “complete devastation and emptiness.”Footnote 41 Early observations made in Western Ukraine had provoked considerable disappointment, but the situation in the East proved to be far worse.Footnote 42 Despite talk of overrunning the Red Army's defense lines and taking control of the industrial heartland, German forces met with stiff resistance that, as they later discovered, had two main purposes: to evacuate on a grand scale people and machines into far-away Soviet regions, and to destroy most of what was left in the plants, factories, and collieries.Footnote 43 Complete plants, along with their labor forces, had been dismantled and transported eastward; the administrative and party elites had left the region, and large segments of the local skilled workforce had gone along with them, if not always voluntarily. Key machinery was lacking, and essential parts had been blown up, in the derelict, empty factories left behind. Large parts of Kiev had been mined systematically and then destroyed when the Wehrmacht entered the city.Footnote 44
German economic experts were astonished by the carefully implemented destruction—a well-orchestrated feat that countered the prevailing image of Soviet incompetence. The Red Army, a delegation of the Ministry of Finance begrudgingly conceded, had done “a good job.”Footnote 45 The efficiency of the Soviet wrecking strategy was not the only surprise in store for the occupiers, however. When German industrial experts poured into the Dnipro and Donbas regions, they were astounded by the progress of the Soviet Five-Year Plans: the greatest strides had been made in the iron and steel industry, with fewer advances in coal mining.Footnote 46 Although not wholly unprepared—a number of state and private agencies had produced maps, reports, and guides to the industries in the occupied territories in the wake of the invasion (though often relying on old data)—German specialists had underestimated the size, scale, and quality of the Soviet iron and steel industry.Footnote 47 Between September and November 1941, a team of engineers on short-term loan to the Wirtschaftsstab Ost by private companies and business organizations visited the Ukrainian iron and steel plants. Their reports on the plants were laudatory. Some installations were outdated, but many had been extensively modernized or newly constructed. All of the destruction notwithstanding, the Dnipro district displayed a “determined effort . . . and generous planning.” A recently built complex at Kryvyi Rih, one engineer noted, had no equal on the continent.Footnote 48 The Ost-Express, a semiofficial newsletter, was astounded by the “mighty plant” discovered in Mariupol'.Footnote 49 At the same time, however, a delegation of Ministry of Finance officials characterized Eastern Ukraine as a backward place, which they described in their reports using derogatory racist terms.Footnote 50
The engineers' reports qualified the picture of wholesale devastation. The Soviets had employed two methods of destruction: relocating machinery (especially motors) and blowing up nonportable installations. According to German estimates, no more than 2,550 of 26,400 motors previously working in the Dnipro district's steel industry had survived, although losses were not evenly spread: while the main Kryvyi Rih plant had lost 97.5 percent of all motors, 1,500 out of 5,000 motors had remained intact in the neighboring Dniprodzerzhynsk complex. Worst of all was the situation in the Zaporizhzhya iron and steel works, where a mere 20 motors were left untouched—out of 4,000. Furnaces, power stations, and steel ovens had been blasted.Footnote 51 The levels of destruction nevertheless varied: some of the works in Dnipropetrovsk and Dniprodzerzhynsk, as well as in Kharkiv, had fared well all in all, though Taganrog and Zaporizhzhya had been hit especially hard. A surprise capture by German forces meant that the Mariupol' plants were left largely intact.Footnote 52
From Plundering to Reconstruction
Although the investigations showed that the newest and most efficient plants had suffered most from disassembling and destruction, reports highlighted the fact that some industrial potential remained.Footnote 53 In a number of cases, the integrated combines had been destroyed, but individual installations—coking plants, blast furnaces, rolling mills, etc.—had been spared. Machines and equipment from dilapidated factories could be used to substitute for the missing pieces in other facilities. During the first months of occupation, however, these measures were not part of the German agenda. In accordance with overall strategy, industrial production was limited to the immediate needs of the troops—namely, supplies and repairs. The focus, therefore, was on confiscation, as well as on jumpstarting the machine construction divisions of the heavy industrial combines. Most economic activity in the summer and autumn of 1941 was dedicated to the search, sequestration, and shipping of raw materials and manufactured goods, most of it going either to the front, to German occupation authorities, or to the Reich.Footnote 54 In the last three months of 1941, the district administered by the Wirtschaftskommando Dnjepropetrowsk alone accounted for 63,736 head of cattle, 1,000 tons of poultry, 11 tons of sheep, 5,880 tons of grain, 585 tons of peas and beans, 980 tons of oil-rich crops, 21 tons of eggs, as well as cotton and minerals such as manganese ore (5,443 t) and ferrosilicium (50 t). In other words, the occupants took everything they could get hold of.Footnote 55
Plundering was not the only form of exploitation during the early phase of the German occupation. The vast mineral reserves of Ukraine stood at the heart of German economic interest in the region. Since the Reich was well-supplied with iron ore—thanks to Swedish imports and the conquest of the deposits in Lorraine—it was manganese ore more than any other raw material (apart from Caucasian oil) that made the occupation of the southern Soviet Union so important.Footnote 56 Of the alloys required for the production of steel, manganese had the broadest application and was used in large amounts. German deposits were limited and of lesser quality, insufficient for sustained mass production, and unsuitable for certain sorts of steel. Although German supplies covered a year's demand in mid-1941, it was likely that stores would shrink rapidly not only because of growing internal demand, but also because the needs of the other occupied countries contributing to the war effort had to be met.Footnote 57 Thomas's February memorandum had stressed the significance of this issue, and by summer, it was a commonplace among German officials that manganese deserved just as much attention as foodstuffs. Gustav Schlotterer, a key figure in the Reich's war economy, urged the rapid examination of the most important deposits, and a special detachment of mining experts was sent to Nikopol' in order to start reconstruction work on the demolished mines. Missing materials and machinery were transferred to Nikopol' from Kryvyi Rih, whose iron ore mines were of secondary importance.Footnote 58 In June 1942, fifty thousand tons of ore were produced; the prewar high had been surpassed by September.Footnote 59
Germany's initial plan was to reduce the Soviet territories to a source of raw materials and agricultural products, but a growing number of Wehrmacht officers and bureaucrats voiced their concerns about the advisability of selective exploitation. With hopes for a decisive victory dissipating rapidly by the fall of 1941, local economic officials called for substantial industrial mobilization. Plundering was clearly a shortsighted strategy: prolonged fighting, strained domestic resources, and enormous distances meant that a greater share of materials consumed on the front and by the occupation forces would have to be provided locally. And the demand to secure the troops' provisions from local resources would have to go beyond just food and clothing.Footnote 60 Local industry needed to be substantially rebuilt in order to support the military tasks lying ahead. Such ruminations reflected a learning curve but they did not translate directly into action. It took instead a slow, step-by-step process to overcome the initial limitations to systematic exploitation. Yet, despite the obvious contradictions that Christian Gerlach has noted, both alternatives—deindustrialization and reconstruction—served the same goal: German military victory and supremacy.Footnote 61
The overall picture of economic mobilization in the first six months of occupation was thus disjointed and piecemeal; without a comprehensive policy in place, most of the German agencies were unable to improve the use of their local or regional resources. The first efforts to take advantage of the surviving industrial facilities were made in late 1941. Other factories were left idle or were employed for other purposes such as repair work and small-scale manufacturing.Footnote 62 Incessant conflict between civilian and military agencies over competences and intentions did not help the situation, either.Footnote 63 As a leading bureaucrat in Erich Koch's RKU staff pointed out, his agency had no interest in creating an “autarkic Ukrainian state. The future Ukrainian state must depend on us industrially. Therefore, we cannot allow industrial finishing in Ukraine. Industrial production may at most include semi-finished products. But we want to extract the optimum for us from Ukrainian agriculture. It will thus be our task to boost Ukrainian farming in every respect while breaking up or at least reducing industrial production.”Footnote 64
Appeals to focus resources on the front prompted a revision of economic policies in the East. At the end of 1941, the Rüstungsinspektion Ukraine noted that military demands had increased substantially in the preceding months, reaching more than seven million marks. A more elaborate economic structure was deemed essential in order to meet the growing demand, which was why these officials pressed their superiors in Berlin to “clarify which course the development of Ukraine's armaments industry should take.”Footnote 65
Goering's orders at the time were not as clear as these agencies had hoped, but they hinted at possible adjustments to the previous policy of deindustrialization. According to Goering, no finished goods should be produced in the occupied territories that would improve the living standards of the local population. He nevertheless indicated at a meeting on November 8, 1941, that oil and manganese would remain priorities, but that the iron and coal industries should also be revived.Footnote 66 This was a crucial step in broadening the scope of economic activities in Ukraine, given that these raw materials were a prerequisite for any significant manufacturing—but little practical change came about as a result of this modification. Against all odds, the Wehrwirtschaft offices in Ukraine increased their efforts to mobilize industrial resources, but large-scale production facilities, especially for badly needed armaments, were still nonexistent in the spring of 1942. Rumors that Hitler had rejected once and for all any ideas of establishing armaments production in Ukraine did not help to boost morale among the staff of the economic agencies.Footnote 67
An about-face in official policy was well under way despite these disappointments. A long, internal BHO memorandum to Paul Pleiger dismissed as “absurd” the original concept of developing only agriculture and raw materials. The memo called instead for broad, balanced industrial production, with an eye toward using Ukrainian resources efficiently and, in the process, easing some of the strains on energy supplies and transports.Footnote 68 The BHO's plans to make full use of the remaining heavy industry in the Dnipro and Donbas regions met with approval by Albert Speer, the recently appointed Minister of Armaments. In May 1942, Speer announced that the Eastern Front would receive locally produced ammunitions as soon as possible; in addition, coal mining, blast furnaces, steel works, and rolling-mills were to be repaired or rebuilt.Footnote 69 With the backing of the new strong man in the war economy of the Third Reich, fresh instructions were issued promptly. A Four-Year Plan directive of May 22, 1942, stipulated that a large-scale ammunitions program was to be undertaken by the Ukrainian iron and steel industries. Imaginatively named the “Ivan Program,” this directive set a monthly production target of 1.6 million projectiles, though this was soon reduced to 1.4 million.Footnote 70 In late June, Hitler completed the about-face by ordering the reconstruction of the Donbas coal mines.Footnote 71 Ironically, the new policies determined that combines with communist names such as Lenin, Liebknecht, and Komintern were to ensure that the Wehrmacht would not run out of bullets or fuel.Footnote 72
The sudden shift in the scale and scope of industrial activity in Ukraine also had repercussions for the way in which the goals were to be achieved. The BHO monopoly was modified, with an eye to the limitations of the Ostgesellschaften and in line with Speer's inclination to give business a bigger role in running the war economy. Private companies were to be awarded so-called guardianships in order to provide the know-how and personnel necessary for overhaul, repairs, and production. The plants remained state property, and the authorities were at pains not to predetermine the ownership question formally. But there was more than just a tacit understanding that the appointed guardian firms would be given priority. For the time being, the plants had to cater to the needs of the BHO—i.e., of the war effort—and could not be run independently. This was compensated by the fact that all costs—and thus all risks—were passed along to the Reich, or, more precisely, to the occupied territories that would, in the end, have to shoulder the financial burden.Footnote 73
Given Pleiger's grip on the BHO, the Reichswerke could have easily laid claim to the lion's share of the plants, as they had done on previous occasions.Footnote 74 But with its human resources anyway overstretched, the state company pursued a comparatively modest course. In a joint venture with the Mitteldeutsche Stahlwerke, a subsidiary of the Flick group, most of the large iron and steel works in Dnipropetrovsk and the vicinity were handled by the Dnjepr Stahl GmbH.Footnote 75 This still left a sizeable number of other investment opportunities for Flick's competitors. Far from being coerced into participation, several major companies vied for the choicest of the booty.Footnote 76 If the reconstruction of potential competitors could not be avoided, it certainly made sense to have at least a say in their development.Footnote 77 Krupp thus managed to secure one of the best picks—the Asov combine in Mariupol'—while other trusts scrambled to secure their preferred factories. In the process, some saw their ambitions thwarted by quicker competitors, such as Flick, Krupp, and Mannesmann.Footnote 78
Obstacles
The reorganization of Ukrainian industry changed the economic policies of the occupiers. There had been some minor successes before the arrival of the first representatives from the private sector, but it was only at this point that the Dnipro and Donbas plants truly got going.Footnote 79 The BHO noted in July that the “guardian firms” were now “fully involved,” optimistically predicting that the first load of crude steel would be delivered by January 1943.Footnote 80 The report also pointed out, however, that the efforts to rebuild the iron and steel plants faced four major hurdles: 1) missing machines and equipment, 2) inadequate energy supplies, 3) insufficient transportation infrastructure, and 4) a lack of (skilled) labor.Footnote 81
The first two problems proved easier to solve than the others. Machines and motors were transferred to the “Ivan” plants from defunct installations nearby, which, according to German plans, would not be rebuilt anyway. Additional machinery and equipment, especially machine tools and other precision gear, were then shipped from the Reich. One of the guardian firms, Dnjepr Stahl, received 20 million marks from the BHO just for repair work and the acquisition of motors, machines, materials, and specific installations.Footnote 82 Not all of the equipment was purchased on a regular basis, though. A good deal of specialized machinery was brought to Ukraine from plants in the occupied territories in the West. Locomotives and motors for rolling mills or electro-industrial factories operated by Dnjepr Stahl, Siemens, or AEG thus came from Alsace, Normandy, and Liège, frequently defying the objections of their French and Belgian owners.Footnote 83
Despite an effort to label these transfers euphemistically as “partnerships,” they were more or less openly enforced. By contrast, power shortages were relieved by public-private subcontracting. With a number of power stations fueled by coal either demolished or short of energy resources, Zaporizhzhya—Europe's biggest dam and hydroelectric power plant—was crucial to solving the severe energy crisis, which had practically limited any reconstruction effort.Footnote 84 It had been blown up by retreating Soviet forces, which had led to the flooding of the surrounding villages and the shutting down of Ukraine's most important source of electric power. A 630-foot hole in the gigantic dam, along with the destruction of most of the generators, meant that the “artery of all industry” in Eastern Ukraine had been cut off. One hundred thousand workers were thus left idle. Everything, Wehrmacht officers noted upon their arrival, was “utterly silent.”Footnote 85 But the situation changed quickly. Zaporizhzhya was first and foremost among the occupiers' reconstruction efforts. Under the auspices of the Todt organization, some sixteen hundred local construction workers and twenty-five hundred Soviet POWs were employed at the site by prominent German companies, including Siemens, Grün & Bilfinger, Philipp Holzmann, and MAN. Costs were calculated at some twenty-two million marks.Footnote 86 Repairs were thus well under way when the “Ivan” decision was issued in mid-1942, and the power station went back online on New Year's Eve. By April 1943, the dam was providing 78 percent of all energy used in the Donets Basin, and 96 percent of the Dnipro region's power consumption.Footnote 87 The transfer of power to the drains of the Donbas pits further enhanced fuel production.Footnote 88 Although it eased pressure on the strained German pits, local coal production never made more than a modest contribution to Ukraine's fuel needs. With a total output of slightly more than four million tons—some 5 percent of Soviet prewar production—it accounted for less than one-fifth of the total coal consumption in the Eastern territories.Footnote 89
The third obstacle—transport—was especially troublesome. A persistent deficit in available engines and cargo space had been one of the most important reasons for rethinking occupation tactics in the first place, since the large-scale shipping of coal, steel, and clothing from the Reich had put massive pressure on the German railway system. The cost of transporting soft coal from Upper Silesia to the Ukrainian power stations was three times higher than the price of the coal itself.Footnote 90 Despite efforts to improve the situation, complaints about insufficient transport facilities featured prominently in economic reports until the end of the war.Footnote 91 This was particularly the case in times of massive troop movement, such as those that occurred during a major Soviet offensive in the winter of 1942–1943, which forced the Wehrmacht to retreat from Eastern Ukraine for several weeks.Footnote 92
No problem posed greater difficulties for the German administration, however, than the labor shortage—a catastrophe of its own making. The lack of those skilled workers who had been evacuated by the Soviet authorities had not mattered much at first, but the subsequent change of course in economic policy only served to highlight the gravity of the loss. The German policy of extermination further exacerbated the situation.Footnote 93 When large-scale deportations bound for the Reich started in the spring of 1942, the working population was already significantly depleted. This certainly ran counter to Germany's economic goals, but did fit into the vision of “reordering” Europe along racial lines.
While some of the Reich's economic experts supported the murderous policies against the Jews and the Slavs, others took a more utilitarian stand. The Wirtschaftsstab Ost boasted in July 1941 that the Jewish labor issue had been solved admirably at a refinery in Drohobycz: skilled non-Jews had replaced Jewish workers, and the refinery was operating “wholly without Jews” (ganz judenfrei).Footnote 94 German officials justified this move by pointing to the allegedly hostile behavior of the local Jewish population and its (unspecified) propaganda activities. Around the same time, the German armaments office at Kiev noted that Jews had been responsible for destroying and dismantling factories, and for stealing machinery and tools.Footnote 95 Officials' efforts to blame the terrible fate of the Jewish population on their own “misdeeds” illustrated the fact that economic rationale did not outweigh ideological zeal. Other observers, though, acknowledged the advantages of employing Jewish labor: because it came for free (at least before the civilian administration took over), or because Jewish artisans were the backbone of many trades and industries and could not be easily replaced—a point even made by the head of the murderous Einsatzgruppe C.Footnote 96 If there was any principled criticism of the extermination campaign directed by the killing units (Einsatzgruppen), it remained private.Footnote 97
The significance of Jewish labor was further enhanced by the horrible fate of the Soviet POWs. Expecting swift victory and unwilling to spend any resources on captives deemed racially inferior, the Wehrmacht pursued a policy of deliberate neglect.Footnote 98 Herded together in fenced camps without adequate shelter or sanitary installations, undernourished Soviet prisoners died by the thousands every week during the first nine months of occupation. Dulag 205 at Berdychiv reported a mortality rate of over 82 percent by the end of 1941.Footnote 99 This was not unintended—nor was it surprising to German authorities. Descriptions of the catastrophic conditions were ubiquitous in military and civilian reports, which included depictions of cannibalism and mass executions. Given the primacy of provisions for the front and for the Reich, German officials agreed that, at best, either the civilian population or the POWs might be supplied—but certainly not both groups.Footnote 100 The Wirtschaftsstab Ost consequently advocated a reduction in rations for the POWs.Footnote 101 By February 1942, at least 2 million out of 3.35 million Soviet POWs had died of starvation.Footnote 102
With the Jews and the POWs either dead or too weak to work, the only remaining source of labor was the non-Jewish Ukrainian population—a group that was initially well-disposed to the German occupiers. This was unsurprising after two decades of Soviet rule, which had cost between five and six million lives as a result of the liquidation campaign against the kulaks, the great famine of 1932–1933, and Stalinist terror.Footnote 103 It did not take long, however, for the Germans to frustrate Ukrainian hopes for liberation and independence. The horrifying fate of the POWs appalled the population, and the disillusionment only deepened when it became obvious that the German occupiers had no intention of treating the inhabitants on equal terms, much less to grant them self-determination or even some degree of autonomy.Footnote 104 Incidents of openly racist discrimination and mistreatment—the phrase “white negroes” rapidly spread—frequently occurred, prompting German officials to call repeatedly for more restraint and respect.Footnote 105 The success of such appeals remained limited, and the increasingly insufficient supply of foodstuffs and everyday goods only served to alienate the Ukrainian population even more. Propaganda could hardly conceal the failure of German policy to attract significant support. As some of the more enlightened commentators realized, slogans such as “Germany offers work and bread” were pointless: “the Russians have had more work than any other people … And we have little bread to promise today or in the foreseeable future.”Footnote 106
Germany's harsh occupation policy was disastrous both to Ukraine and to the Reich's economy. Peter-Heinz Seraphim—in civilian life a prominent Judenforscher—utterly lambasted the occupation policy in the single most damning document written by a German official. His long memorandum was shortened and toned down by his superior before it was forwarded to Germany, but it nonetheless squarely placed the blame for Ukraine's ruin on poor management.Footnote 107 Seraphim summarized the murderous intentions and effects of the hunger strategy, the scale of the killings of Jews and POWs, and the results of misguided planning and incompetent administration; he ridiculed the illusory ideas about agricultural benefits from occupation; and he highlighted the pernicious effects of the deliberately created disparity in buying power between German occupiers and locals. In a key passage of his philippic, Seraphim predicted that all efforts at reconstruction were doomed without a change in what might have been called human resource management: “We have to be absolutely clear about one thing: that in the Ukraine, in the last analysis, only Ukrainians can create economic assets. If we shoot dead all the Jews, let the prisoners of war die, condemn citizens of the big cities to death by starvation, and also, in the coming year, lose a part of the rural population through starvation, the question remains: who will be left alive to produce economically valuable goods?”Footnote 108
Seraphim's clarion call seems to have gone unanswered. Ukrainian workers continued to be treated with disdain and with indifference to their physical and mental health. Output and food rations were strictly correlated to labor productivity. While the penalty for petty theft was execution, even minor mistakes and rule-breaking by workers led to harsh and frequently inhumane forms of punishment.Footnote 109 It was thus hardly surprising that labor recruitment became more and more difficult and that, despite the threat of severe sanctions and the use of brutal force, migration to the countryside—motivated by the hope for less harassment and more food—grew exponentially.Footnote 110 In October 1942, after the steel works in Zaporizhzhya had lost within mere days more than half of its 4,200-person workforce, BHO officials demanded that forced laborers be kept in fenced and guarded camps.Footnote 111 Still, the numbers of so-called contract violations did not decrease significantly, and understaffing continued to be a problem until the end of occupation. In May 1943, the Dnipropetrovsk offices noted with some resignation, a turnout of fewer than 880 of the 9,300 workers expected for the “Ivan Program.”Footnote 112
To make matters worse from the German perspective, the year-long deportation of hundreds of thousands of forced workers to the Reich turned what was left of Ukrainian collaboration into either passive or active resistance.Footnote 113 Labor for German purposes had hardly been voluntary prior to the mass deportations—food rations in urban areas had been linked to employment certificates, work assignments had been made compulsory, and contracts could not be terminated by employees—but the degree of coercion reached new heights in terms of numbers and severity.Footnote 114 In May 1942, the German plenipotentiary for labor recruitment, Fritz Sauckel, fixed the number of workers that the Soviet territories would have to contribute at 1.6 million, with the vast majority (1.2 million) coming from Ukraine and southern Russia.Footnote 115 Sauckel's demand that recruitment should be implemented “by all means and ruthlessly” was swiftly implemented, and the targets were soon met and surpassed. At the end of January 1943, 1.8 million civilian workers and 600,000 POWs had been deported to Germany.Footnote 116 By the end of the war, some 3.1 million civilian men, women, and children had been forced to work in Germany and Western Europe; more than half of them, i.e., about 1.7 million, were from Ukraine.Footnote 117
Not surprisingly, forced labor recruitment had a devastating effect on workers' morale; it was also counterproductive with respect to reconstruction efforts. It was highly characteristic of occupation policy, as well as of the German war economy more generally, that the decision to rebuild Ukrainian industry coincided with efforts to draft more people from the very regions where the rebuilding was to take place.Footnote 118 The ensuing conflicts—reflected in many reports by guardian companies, civilian agencies, and Wehrmacht offices—remained unsolved and were instead camouflaged by strong rhetoric pretending that both goals could be fulfilled if necessary.Footnote 119 Because this proved to be wishful thinking, labor recruitment became even more brutal and merciless, drawing on whatever labor was at hand, including children, displaced persons (DPs) from the front, and even people in quarantine.Footnote 120 This hardly boosted productivity, but the sheer numbers alone managed to do the trick and accomplish much of the work—even if human sustainability remained irrelevant. In March 1943, German authorities counted a total of 557 iron and steel plants and factories employing some 86,000 workers. Another 65,000, including 8,200 POWs, were working in the Donbas mines.Footnote 121
The reconstruction of heavy industry along the Dnipro and Don Rivers progressed despite these obstacles. Barely six months after “Ivan” had been launched, basic iron and steel production resumed, and the sheet rolling mills at Dniprodzerzhynsk and Makeyevka were back online by October. In May 1943, the Voroshilov plant started the fabrication of shells.Footnote 122 Optimism prevailed and the BHO administration was enthusiastic about the “gratifying new spirit” that made itself felt on the banks of the Dnipro—in contrast to the disappointing situation in Mariupol', where Krupp had not delivered on its promises.Footnote 123 The high spirits of German managers and officers were illustrated by renewed attempts by private businesses to make permanent inroads into the Ukrainian steel industry, as well as by the belated renaming of the plants, which were now given the names of German Gaue.Footnote 124 The “success” story came to an abrupt end, however, in the summer of 1943, when the Eastern Front collapsed. In early September, orders came for the termination of “Ivan” and the dismantling of all industrial installations. The industrial hubs in the Donbas and along the Dnipro were once again turned into battlefields.Footnote 125
What followed was a repeat of 1941. Since mid-July 1943, preparations for the deconstruction and shipping of all equipment, machinery, and installations had been under way; guardian firms had been drawing up lists with everything worth “cannibalizing,” as dismantling was aptly called.Footnote 126 Everything that had been rebuilt in the past two years was now taken apart; factories and bridges were shipped westward. Seventeen thousand railroad cars were dispatched from Dnipropetrovs'k and Kiev, with more than three thousand coming from the iron and steel works alone.Footnote 127 The districts east of the Dnipro also contributed a significant amount of raw material, finished goods, and livestock; in addition, they witnessed the forced migration of 375,000 people to areas still under German control, many of them against their will. What could not be retrieved was destroyed, leaving nothing but “scorched earth” behind, as the RKU's Erich Koch had demanded.Footnote 128 In a scene bordering on the grotesque, the recently repaired Zaporizhzhya dam was blown up by the same people who had just finished filling the holes, and the coal mines of the Donbas were flooded once again. Force was used to break resistance by those segments of the local population that tried to prevent their workplaces from being destroyed once again. If the occupiers were unable to retain these assets, the enemy would surely not benefit from them, as the retreating Wirtschaftsinspektion Süd noted with grim satisfaction.Footnote 129
Conclusion
German economic planning for the Eastern territories was either nonexistent or ineffective during the three years of occupation. Large parts of the USSR were not to be developed in an industrial sense at all; others would cater only to the needs of the “Greater German Empire,” i.e., delivering agrarian products, as well as those resources the German economic Großraum lacked. The foremost target of economic exploitation was Ukraine because of its significance as an alleged agrarian surplus region—something it could only become by starving millions of locals to death. In fact, German planners deliberately factored this into their visions of creating a new European order. Besides agricultural products, it was above all the manganese and iron ore deposits at Zaporizhzhya and Nikopol' that appealed to German military economists as the key to continental autarky. Yet, these plans were deficient in a number of ways: the USSR could not provide everything the German war economy needed, and German strategists did not realistically expect to move beyond the European part of the Soviet Union: the essential resources of the Urals would thus remain beyond Germany's reach. More important, it was doubtful that the Wehrmacht could get its hands on the Caucasian oil fields. All of this meant that the German war economy would be worse—not better—off after attacking the USSR. Such doubts were articulated in several Berlin agencies, but criticism of the decision to invade the Soviet Union nevertheless remained muted.Footnote 130
The first three months of the campaign vindicated the objections previously voiced by the skeptics. The Red Army had not been swiftly defeated, and, as a result, the region's vast resources eluded the Germans. Despite the lack of preparation, Soviet administrators had devised a skillful evacuation strategy that left much of the Ukrainian economy in ruins. With few exceptions, neither the mines nor the farms could be put to use in the way the German occupiers had planned. With no substantial energy production, with machines and motors missing by the thousands, with skilled labor either evacuated or evading German recruitment, and with a lack of transport facilities, the occupation proved more of a burden than a victory. But one should not overlook the fact that an immediate and intense reconstruction effort could have mobilized a significant portion of Ukrainian industry, as developments after the spring of 1942 would show. The German occupiers lost valuable time by adhering to the notion of turning the Eastern territories into a subordinate source of farming products and raw materials without sophisticated industry of its own. Meanwhile, racist Nazi policies had led to the extermination of Ukrainian Jewry, the starvation of millions of Soviet POWs, as well as the mistreatment of the local non-Jewish population. Opportunities for large-scale cooperation were wasted, and the labor pool was drained by the deportation of forced workers to the Reich.
Against this backdrop it is not surprising that the German efforts failed, but rather that there were significant achievements at all, such as the “Ivan Program” of 1942–1943. If such a decision had been taken earlier—and this is a point that has been underemphasized by older characterizations of German occupation policy as blinded by racist visionsFootnote 131—the plans to make the Eastern Front self-sufficient in munitions might have been achieved after all. In practice, Ukrainian finished products never made a major contribution to the German war effort. Yet, more important were the raw materials produced under German rule: between November 1941 and November 1943, Ukraine provided 4 million tons of bituminous coal, 750,000 tons of lignite, some 380,000 tons of iron ore, and 1.8 million tons of manganese. Substantial quantities of mercury, molybdenum, and tungsten were also extracted. But nothing was more essential than manganese: when Nikopol' was lost, calculations suggested that steel production in the Reich and the annexed territories would fall from thirty million to a mere thirteen million in the middle term, thereby decisively undermining armaments production. Without the large amounts of ore gathered in Ukraine, the collapse of the German war economy would have been greatly accelerated, a fact that even comprehensive studies such as Tooze's Wages of Destruction have missed because of their marginalization of the occupied territories.Footnote 132
At the end of the war, German economists tried to compute what the Third Reich had actually gained from the occupation of the western Soviet Union. Despite insufficient data and various obstacles to quantification (such as the weighing of exports against imports), their estimates found that the vast territories of the occupied East had contributed only insignificantly to the German war effort—less than Belgium or the Netherlands had, and a mere fraction of the spoils of war gained from France.Footnote 133 The comparison among the net production values of French, Belgian, Dutch, and Soviet deliveries is misleading, however, even when compensating for differentials in purchasing power: the Western countries contributed mostly finished goods with higher prices than raw materials. Still, they had to be made of something—namely, the raw materials provided, directly or indirectly, by the Soviet territories: primarily manganese, soft coal, wheat, and human labor. It is difficult to express in monetary terms the value that the Soviet Fremdarbeiter (foreign workers) made to German production—and inappropriate, given the horrific death toll of the forced labor program. It is even harder to estimate the economic burden that the deportations placed on the occupied territories. Indeed, most research has not even addressed this question.Footnote 134 It seems safe to say, though, that the strained German war economy needed all the help it could get, and, in that respect, Ukraine certainly represented the largest chunk of all Soviet territories. Provisions for the Eastern Front would have broken down long before autumn 1943 without the assets gained from occupied Ukraine, for the Reich proper depended heavily on scarce resources such as the alloys it provided.
Ukraine's situation after its second “liberation” was even worse than it had been before the first one. Already suffering from Stalinist oppression before the war, Ukrainians suffered through three years of continuous battle, and had to see their homes and workplaces ravaged twice in succession. Hundreds of thousands of family members and friends were deported to the Reich, while those who remained in Ukraine became victims of malnutrition, mistreatment, and mass murder.Footnote 135 The loss of lives defies computation. That German economic planners failed to grasp the meaning of genocide beyond its implication for the human factor of production (Produktionsfaktor Mensch)—even while their New Order vision was falling apart—speaks volumes about their racist prejudices as well as their déformation professionelle.Footnote 136
