Many authors claim that Stalin trusted Hitler or that he refused to read the reports of his spies claiming they were provocations.
The truth is a little more complex than that. During the period 1939-41 the Soviet Union had greatly expanded its military forces and had introduced modern weapon systems like the T-34 and KV tanks and the Yak and MiG fighters. The Soviet leadership definitely expected a conflict with Nazi Germany however the question was when and where.
In 1941 the Germans were already fighting against the British so Stalin reasonably assumed that they would not be able to start a conflict in the East. However the Soviets also knew that the German economy desperately needed raw materials and agricultural products. The area that could provide them with all their needs was the Ukraine, so they understandably expected a German attack in that area.
Germany depended on Soviet exports of oil and other raw materials but by 1941 both sides were withholding products and arguing over prices.
The German intelligence service Abwehr was able to take advantage of this conflict in order to convince the Soviets that the units being moved to the East would take part in a border incident followed by economic demands. They could execute such a plan because they already had agents working inside Soviet intelligence and their message matched the Soviet appreciation of the situation.
According to Soviet interrogations of German personnel the Berlin Abwehrstelle had under its control the Latvian journalist Orest Berlinks. This person was considered to be a most reliable source by the Berlin rezident (chief of intelligence) Amayak Kobulov with the result that the German disinformation passed directly to Moscow. Berlinks claimed that the movement of troops to the East was a gigantic bluff.
At the same time the Abwehr used other channels to give the impression that a military action against the Soviet Union would be preceded by economic demands in the Ukraine. Arvid Harnack, head of the CORSICAN spy network in Berlin, reported to his controller in April ‘41: ‘The USSR will be asked to join the Axis and attack England. As a guarantee, the Ukraine will be occupied and possibly the Baltic states also.’
From the SENIOR spy network came a similar message in May ‘41: ‘First Germany will present an ultimatum to the Soviet Union claiming wider export privileges as a reprisal for Communist propaganda. As a guarantee of these claims, German emissaries must be stationed in industrial and economic centers and the factories of the Ukraine. Certain Ukrainian regions are to be occupied by the German army. The delivery of this ultimatum will be preceded by a war of nerves whose object will be to demoralize the Soviet Union.’
The German deception was reinforced by Soviet intelligence errors, specifically the fact that they overestimated the size of the German Army.
Their estimate on the German divisions in the East in May ’41 was 114-116 while the real number was 117 in June. For the Soviet leadership this was a dangerous concentration of enemy strength but it did not necessarily mean war because these forces represented only ~42% of German army strength. If Hitler was serious about war he would have sent his entire army to the East.
What they didn’t know was that they had overestimated the size of the German army. Their figures showed 286-296 divisions while the real number was 209. Using this number the percentage grew to 58%.
This mistake reinforced their belief that the Germans would instigate a border incident but not a full scale war.
The elaborate German deception shows that even a country with good intelligence resources can be tricked by a skillful opponent. Mixing truths with lies and playing on the Soviet preconceptions the Germans were able to keep the Soviet leadership guessing.
Sources: ‘Deadly illusions’ by Costello and Tsarev, ‘Thunder in the East’ by Mawdsley