Vera Asenova

Money and Power in Bilateral Relations: German-bulgarian Relations in the Interwar Period Vera Asenova

As a response to the Great Depression in 1931 Germany adopted a policy of exchange control where themovement of foreign currency was subject togovernment control. This regime served as a defensemeasure against currency devaluation but itinhibbited international payments among exchangecontrol countries. Trade between them was organized onthe basis of bilateral clearing agreements, whichcentralized both foreign trade and payments at thestate level. The book analyzes the clearing system in the case ofGermany's relations with Bulgaria, which developedthe highest trade dependence on Germany in the 1930s. An almost complete opposition of free trade, bilateral clearing is seen as a mechanism ofpolitical power maximization and resource allocationfrom the periphery to its core. Using JonathanKirshner's framework of monetary power the workoffers a detailed analysis of the link betweeninternational monetary relations and political power. The shift of international trade regime from a GoldStandard and free trade to exchange control andbilateral clearing provided an opportunity for theGerman government to covertly finance its expenditurein the 1930's and during WWII.