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Significant progress was made during those discussions, with Germany's demands being aggressive but much less than what they would attain by invasion. Whether it was last minute cold feet by Hitler to explore options, or a ruse to lull the allies into being unguarded (which it did) I am uncertain.
Well to be fair, a principle of Hitler's foreign policy apart from specific certainties (his disdain of communism and Judaism) was his general lack of commitment to any one idea in particular. His early rule showed several times when he postulated various different offers to varied parties, sometimes even self-contradicting, primarily to see which one was the best received and whichever turned out the best.
Geoffery Roberts in his article (and later expanded into a book) "The Soviet Decision for a Pact with Nazi Germany" gives the most detailed review that I have read. Normally I would have been very suspect of any thesis that suggested Stalin was less calculating, purposeful, and strategic on the fate of Poland than the Germans, but I admit that he has convinced me on many of his views.
It's interesting to note that Stalin's position was one of complexity and contradiction. He was simultaneously in a position of strength (the Western Allies wanting his support in a showdown with Hitler, while the German dictator was also trying to gain access to Soviet resources), but also in a state of weakness; he commands a nation that is still industrializing and modernizing, has few actual allies, his Red Army is far from being the potent force it will one day be recognized as, and is only two options are a fascist state who's leader has repeatedly expressed his opposition to communism and two Western nations who's previous escapades involved leaving Czechoslovakia to it's fate.