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But relations between the Soviet spies and their Stasi colleagues were sometimes fraught, and Dresden was far more than the East German backwater it may have appeared to be. For one thing, it was on the front line of the smuggling empire that for a long time served as life support for the GDR’s economy. As the home of Robotron, the biggest electronics manufacturer in East Germany, producing mainframe and personal computers and other devices, it was central to the Soviet and GDR battle to illicitly obtain the blueprints and components of Western high-tech goods, making it a key cog in the eastern bloc’s bitter – and failing – struggle to compete militarily with the rapidly developing technology of the West. In the seventies, Robotron had successfully cloned the West’s IBM, and it had developed close ties with West Germany’s Siemens.[8] ‘Most of the East German high-tech smuggling came through Dresden,’ said Franz Sedelmayer, a West German security consultant who later worked with Putin in St Petersburg and started out in the eighties in the family business in Munich selling defence products to NATO and the Middle East.[9] ‘Dresden was a centre for this black trade.’ It was also a centre for the Kommerzielle Koordinierung, a department within the East German foreign trade ministry that specialised in smuggling operations for high-tech goods under embargo from the West. ‘They were exporting antiques and importing high-tech. They were exporting arms and importing high-tech,’ said Sedelmayer. ‘Dresden was always important for the microelectronics industry,’ said Horst Jehmlich.[10] The espionage unit headed by East Germany’s legendary spymaster Markus Wolf ‘did a lot’ for this, added Jehmlich. He remained tight-lipped, however, on what exactly they did.

The Dresden Stasi foreign-intelligence chief, Herbert Kohler, served at the same time as head of its information and technology intelligence unit,[11] a sign of how important smuggling embargoed goods was for the city. Ever since Germany was carved up between East and West in the aftermath of World War II, much of the eastern bloc had relied on the black market and smuggling to survive. The Soviet Union’s coffers were empty after the ravages of the war, and in East Berlin, Zürich and Vienna organised-crime groups worked hand in hand with the Soviet security services to smuggle cigarettes, alcohol, diamonds and rare metals through the black market to replenish the cash stores of the security services of the eastern bloc. Initially the black-market trade had been seen as a temporary necessity, the Communist leaders justifying it to themselves as a blow against the foundations of capitalism. But when, in 1950, the West united against the Soviet-controlled bloc to place an embargo on all high-tech goods that could be used for military means, smuggling became a way of life. The free choices of capitalism and the drive for profit in the West were fuelling a boom in technological development there. By comparison, the planned socialist economy of the eastern bloc was frozen far behind. Its enterprises were bound only to meet annual production plans, its workers and scientists left to procure even the most basic goods through informal connections on the grey market. Isolated by the Iron Curtain, smuggling became the only way for the eastern bloc to keep up with the rapidly developing achievements of the capitalist West.[12]