The Soviet command economy, which prioritized capital goods, proved surprisingly robust in recovery. By 1950, most indices of Soviet industrial production had met or exceeded 1940 levels. Shortages, especially in housing and consumer goods, remained endemic and pervasive, but this was a trend the Soviet public was long used to. Given the scale of the German's scorched earth campaign, such gains were quite impressive and fueled the optimism of the early Khrushchev years that the Soviet experiment would finally pay dividends after much hardship and privation. But in the realm of the Cold War, there was one instance where the Soviet imperative to rebuild arguably put it at a marked disadvantage to the United States: Germany.

Although the Soviet invasion of Germany came with a wave of rapes and other crimes, the defeat of Hitler added a degree of prestige both to Stalin and communism in the immediate postwar milieu. Not only had the war completely discredited fascism, many of the centrist liberal and conservative parties had been damaged by their association with fascism, either through collaboration or accepting fascism as the lesser of two evils. Much of the immediate postwar period saw these center and right political leaders spend an enormous amount of time justifying their wartime actions and disassociating themselves from the failed politics of the interwar period. The European parties of the left, in contrast, were much more vibrant and presented themselves as the politics of the future. Stalin often took the electoral success of the left, as well as its leadership by the various communist parties, as a given, and he assumed that the popularity of the left would remain. This meant Soviet occupation policy in Germany often proceeded from a set of assumptions that encouraged a very short-sighted occupation policy that damaged the Eastern zone.

Many of these short-sighted policies were deeply intertwined with the overarching need for Soviet reconstruction. Allied wartime agreements over the future disposition of the German economy gave the Soviets significant leeway to dismantle German heavy industry in their zone and fostered an expectation that the Western occupation would do the same. The US occupation "blueprint", JCS 1067, laid out an ambitious plan for decartelization and restructuring of the German economy. In the meantime, the economic branches of the Soviet military government (SVAG) proceeded with a strategy that one study of Soviet occupation policy aptly called Soviet reparations policy in the 1945/46 period as "smash and grab" in which the Soviets sought to obtain the maximum amount of material before formal Allied agreements reined in the process. But both Stalin and Molotov expected that the Western Allied military governments would abide by wartime agreements, especially over the Ruhr area, and certainly would not expect the West to actively encourage the rebuilding of German heavy industry so soon after the war. After it became apparent in 1946 that neither the British nor the Americans were going to act as expected, Soviet dismantling of industry in their zone haphazardly tried to arrest "smash and grab" policies and restore some order.

But these policies were deeply entrenched in the SVAG system and it proved nigh impossible to reverse course when it was increasingly apparent that German division would be permanent. Requisitions of industrial equipment in the Easter zone continued apace, and Soviet negotiators sought to use the French as a wedge in the West to encourage more dismantlement of industry in the Western zones. But these efforts largely failed, and disparity between dismantlement in both zones was striking. One conservative estimate is that while the future GDR lost some 30% of its 1944 industrial capacity, the Western zone lost only 3%. American-led efforts to reclassify German industrial equipment as medium to light industrial equipment not only flaunted wartime agreements to dismantle Germany's warmaking potential, but also primed the Western zone for an economic recovery. Ironically, smash and grab did very little for the Soviet reconstruction. Soviet dismantling teams seldom often haphazardly removed machinery, damaging it in the process, so that it was only suitable for scrap when it reached the Soviet borders. The net result of the Soviet reparations was that it cemented a lag in the Eastern zone's economic development by creating systemic bottlenecks in the region's industry, which already suffered from a relative poverty in resources such as coal, compared to the western Germany.

The problem with Soviet reconstruction efforts created in Germany was not just material, but human as well. The need for trained and skilled Red Army personnel to be fed back into the Soviet economy was one of the overarching imperatives for the demobilization of the Red Army between 1945-46. The result was that the garrison troops left to SVAG tended to be less educated and more prone to indiscipline and other vices than the ones who left the zone. The type of soldiers who remained contributed to crime and corruption levels among SVAG troops which remained fairly steady in the immediate postwar years. Criminal activities like rape and looting remained at very high levels. Binge drinking, which was a preexisting problem within the Red Army, became a further lubricant to this behavior. This was important to the overall trajectory of the Eastern zone's military occupation for while crime and profiteering was not unknown in the West, the military governments in the Western zones managed to put a damper on these activities postwar. In contrast, the Soviet occupation forces had a very public reluctance to deal with this issue, especially since local commanders often invariably sided with their troops when German civilians brought these complaints forward. Faced with this chronic indiscipline, SVAG elected to cut the Gordian knot by removing its garrison troops into barracks socially segregated facilities so that contact with the German population only took place in a highly mediated fashion. This would become one of the main facets for the Soviet forces in Germany throughout the Cold War where the "friends" as they were known in SED discourse, were a remote presence in daily life. While the civilian-military relationship in the FRG was far from perfect, there was much greater social interaction between Western troops and their German hosts that normalized this relationship.

The collateral damage of Soviet dismantlement policies to Soviet prestige in Germany was quite severe. Despite promises of communism's ability to deliver a high quality of life, the destruction of the Eastern zone's industry meant that poverty and shortages remained endemic in the Eastern zone. The harshness of Soviet policies became the gift that kept on giving for the FRG's conservative CDU/CSU party and electoral campaign materials stressed the gap between communist rhetoric and reality. Within the Western zones' SPD, the heavy-handedness of SVAG policies split much of the non-Communist German left between a pro-FRG majority and and pro-SED minority, allowing Adenauer's center-right coalition to assume a dominant role in the early years of the FRG. As the Soviets realized that their German hand was quite weak, they instructed the Eastern zone's KPD to clamp down on internal discipline, leading to the zone's forced amalgamation of the KPD and SPD into the SED. This clampdown in 1946/47 further alienated the Eastern zone's politics from the rest of Germany and undercut the appeal of Stalin's offers for a neutral, unified Germany (how genuine these offers were before the Berlin blockade is a matter of some debate) within the Western zone. The KPD in the West likewise suffered both from confused directions from Moscow/Berlin, but also from having to defend Soviet actions.

Of course, reparations policy was only one strand of the Soviet occupation of Germany. The gap between the two Germanys' economies had many well-springs, and the dismantling of the East's industry was only one of them. But beyond its quite real material significance, industrial dismantling had a symbolic weight to it. Smash and grab sent a very clear and immediate message as to who would benefit from Soviet hegemony, which chilled a good deal of support for communism in Germany. It put the SED in an awkward position where it either had to defend Soviet actions, or simply ignore the problems it created. Within SVAG itself, the left hand often did not know what the right hand was doing and Soviet political chiefs often complained in vain that the economic teams, which often had connections of GOSPLAN and other power blocs, did not listen to their warnings about the German economy. The net result was the image of the Soviet occupation in the West, as well as within the Eastern zone itself, was less than complimentary. Soviet heavy-handedness was often wed with Soviet incompetence as rationing and shortages remained realities within the GDR through the 1950s and early 1960s. For the Cold War competition for whose Germany was better, such an amalgamation of harshness and doltishness was the worst of both worlds for both the SED and their Soviet friends.

Sources

Major, Patrick. The Death of the KPD: Communism and Anti-Communism in West Germany, 1945-1956. Oxford: Clarendon Press, 1997.

Naimark, Norman M. The Russians in Germany: A History of the Soviet Zone of Occupation, 1945-1949. Cambridge, Mass: Belknap Press of Harvard University Press, 1995.

Ross, Corey. The East German Dictatorship: Problems and Perspectives in the Interpretation of the GDR. London: Arnold, 2002.

Slaveski, Filip. The Soviet Occupation of Germany: Hunger, Mass Violence and the Struggle for Peace, 1945-1947. Cambridge: Cambridge University Press, 2013.