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Soviet Russia and the Powers


ISSUE:  Summer 1925

I

Soviet Russia stands with one foot in Europe and the other in Asia. No single fact is more important in determining the underlying currents of Communism’s foreign relations. Russia’s policy towards her neighbors in the Asiatic continent is motivated by one set of interests; her attitude towards the European Powers, towards England, France, Italy and Germany, by an altogether and fundamentally different set of interests. To put the distinction in a nutshell, I would say that politics moulds the policy of the Bolsheviks towards Asia whereas economics is the guiding factor in their relations to Europe with politics running a bad second and coming into view only when economic considerations permit.

To be sure, Soviet Russia has sought markets in the countries to the east of her but as yet the non-Russian lands of Asia can be of little economic assistance to the Soviets. When Russia wants loans, credits, markets, raw materials, machinery, technical experts and industrial experience she turns to the West, to Europe. And to the United States, but that is a chapter by itself. Occasionally, as in the case of Poland and Roumania, Bolshevism’s foreign policy is directed by political expediency rather than by the possibility of practical advantage. With regard to the great states of Europe, however, and this applies equally well to America, the Communists are ready, nay anxious, to scrap political principles for practical prizes. The key to Russia’s much needed industrial, commercial and financial rehabilitation lies in the West, and the Kremlin knows it. So pet revolutionary notions are hidden in the background; and Chicherin, the Red anti-monarchist, atheistic Commissar for Foreign Affairs, bows to a king and dines besides a cardinal in Genoa, Moscow gloats over Mussolini’s recognition though as a Fascist he is Bolshevism’s most hated enemy, radical Russia pines for an agreement with Tory Britain and would go to almost any length to have an ambassador in Washington despite the fact that Mr. Hughes was anathema to every Communist and notwithstanding Trotzky’s repeated statements to the effect that the United States is Bolshevism’s greatest peril. All these things are plainly inconsistent. You cannot curse the capitalists one day and try to negotiate with their governments the next. But this is one of the many inconsistencies of which the Communists’ state has been guilty ever since 1921 when they decided to make peace with the capitalists at home, and since 1922 when they reconciled themselves to what for them is the sad reality that the World Revolution is still quite a distance off. Now they aim for the assistance of the Western world because without it they are seriously handicapped. , Take the little ceremony which was recently staged when Leonid Krassin, the first Bolshevik ambassador to France, presented his credentials to President Doumergue. Krassin spoke the usual little speech, and then Monsieur le President recited his own conventional oration in which he assured Krassin of the close ties between the French and Russian peoples, of France’s desire to live on friendly terms with the Russian government, and more to like effect. How Krassin would have liked to burst forth into an angry tirade! How he would have liked to tell Doumergue that it was France which waged war on the Soviets from 1918 to 1920; that it was France which inspired, financed and armed the anti-Bolshevik expeditions of Admiral Koltchak, General Petlura, and Baron Wrangel; that it was Clemenceau who at the Versailles Peace Conference advocated the building of a “cordon sanitaire” around Russia; that it was Paris, finally, which had been the centre for so many plots to overthrow the Communist regime. Krassin would have given much to speak his mind for a brief five minutes. But he held his tongue. Why? Because “Red” diplomats have instructions to bury their revolutionary impulses and to think of loans and trade agreements. The Russian people need these things more than soap-box harangues.

Thus Soviet Russia’s policy abroad mirrors the state of her affairs at home. The entire country is hungry and thirsty for money. The Bolshevik leaders do not hide the fact, nor could they. Every industrial enterprise in the land is starved for want of capital sufficient to buy new machinery to replace the old that has functioned for ten years or more and is now too worn to be efficient. During the last year the population has grown more prosperous and its demand for manufactured articles is twice as great as it was twelve months ago. But the industries, almost all of which are owned and operated by the state, cannot well satisfy this increased demand because they have not the money for raw materials, for wages, for modern improvements, for new technical installments, for power, for new machinery which the satisfaction would necessitate. With the means at their disposal the Soviets can perhaps increase production by one-third where it needs to be doubled. The question of a loan or of foreign credits thus becomes the central issue around which all of Soviet diplomacy revolves. In negotiations with France and with England this point is ever in the foreground.

II

This is what happens. The Soviet mission, headed by Christian G. Rakovsky, arrives in London. Its members present themselves to Ramsay MacDonald and announce that “We have come to obtain a loan of several million dollars.” “But,” says MacDonald, “you really cannot expect England to give Russia money when she still hasn’t returned what we gave her before the war.” “We disagree with you,” answers Rakovsky or Tomsky or Preobrazhen-sky. “In principle we are opposed to paying the debts incurred by the Czar whom we hated and who persecuted us and the workers. We do not think we ought to pay. But, if you make repayment the only condition for a loan then, I suppose, we shall have to settle with your bondholders provided, of course, they reduce the total indebtedness.” Another inconsistency, incidentally. Detailed negotiations on this and other matters stretch over a period of four months. In the end the Soviet diplomats reach an agreement with the British bondholders and the Labor cabinet consents to guarantee a Russian loan. But the Bolsheviks stipulate that the debts which they have reluctantly agreed to honor will not be paid by taxing the Russian worker and Russian peasant. They are taxed heavily enough as it is and the government cannot levy more on them because it depends for its existence on their good will. The money for the placation of the bondholder will be derived only from the loan. Thus, if Russia pays 6% interest on it and if in Moscow the money will earn 15% the difference will be used to pay the debt.

A loan would have meant partial Russian economic bondage to England; for, since the Soviets were pledged to spend most of it in the United Kingdom, they would have been forced to turn to England again when the machines and equipment bought with the money required replacement or renewal. Add to this the prospect of reducing English unemployment through orders and revived trade with Russia plus the pressure on MacDonald from the radical wings of his party, and one understands why he agreed to guarantee the loan.

But the Conservative Party no sooner came to power than they tore up the MacDonald-Rakovsky treaties and rebuffed Moscow on any excuse. The economic factors which moved the Labor cabinet are as cogent today with the Tory cabinet in office. Political elements, however, are different. The British Conservatives, as their advocacy of Imperial Preference indicates, are as greatly interested, or more interested, in the fate of the dominions and colonies of the Empire as in conditions at home. Lord Curzon, ex-viceroy of India, Winston Churchill, former Minister of Colonies and an ardent expansionist, and Austen Chamberlain, think in terms of the Empire much more and much oftener than do MacDonald and Henderson. And Russia is undoubtedly a passive threat to the British Empire. Russia and Britain come to grips in Asia where the frontiers of the Soviet Union and the British Empire meet. No matter what the nature of the government in Russia, this danger exists. It was as true when the Romanov sat on his throne as it is today when the successor of Lenin rules in the Kremlin, for this clash is inherent in the geography of that quarter of the globe. As the world is now constituted, Russia and England must dispute in Persia, Afghanistan, Tibet and even in China. Russia is also contiguous to India, a circumstance which makes the situation even more alarming for Britain.

One might ask how it happened, then, that Russia and England were members of the Triple Entente and fought the World War side by side. History supplies the answer. In 1907 an epoch-making treaty was signed in St. Petersburg which sought a temporary settlement on Eastern questions in order to pave the way for a bloc in the West. English statesmen succeeded in convincing the Czar that Germany was fast becoming a menace to his country and that he ought to join the union against the Central Powers. But it was not merely a matter of persuasion or of friendship for Great Britain. One of the Central Powers, Austria-Hungary, irritated Russia in the Balkans and frustrated Slav hopes in the peninsula. Another ally of Germany, Turkey, held Constantinople and the Straits which Russia coveted and which England promised her in case of war.

Accordingly, the Czar’s ministers acquiesced to an armistice in the East in order to win certain advantages in the West. By the terms of the 1907 convention Russia and England divided Persia into “Spheres of Influence,” Russia taking the northern half as her special preserve, and England the southern portion; Russia recognized Britain’s hegemony over Afghanistan; and both countries pledged themselves to keep hands off Tibet.

Today no such agreement exists, nor could it; for Bolshevism’s policy in Asia runs counter to it. The situation in Europe is now much changed but in Asia Anglo-Russian relations could not possibly be more bitter or more strained. The British Tories believe, perhaps justly, that the passive threat which Russia presents to British domination in Asia would be transformed into active danger if the Soviets could get on their economic feet. Consequently they, the British Conservatives, are in no hurry to hasten that rehabilitation by pouring their own money into the Communist coffers.

Bernard Shaw, and with him many others, believe that even the Tory cabinet will be forced to negotiate some sort of commercial agreement with Russia; for Russia is already an important customer for British goods and an important source of raw materials for British industries. Moreover, Russia’s potentialities are inconceivably great. But no Bolshevik expects a loan from England in the near future.

III

Soviet diplomacy, accordingly, is concentrating all its energies on France. Here again the loan occupies the centre of the stage. But the Krassin-Herriot pourparlers are even more involved than those which consumed four months in London. Because, in the first place, the Russian debt to France and to individual Frenchmen is greater than the debt to England and to individual Englishmen. In the second place, the average holder of Russian bonds in France is the small rentier, the little landowner, or retired colonel or official. He drives a hard bargain. But what is more important, it will be difficult to compensate him. To settle the claim of some large British industrialist who owns Russian paper the Soviet government can offer him some mining or lumbering concession. The Frenchman, on the contrary, will want his thousand francs just as he paid it out in 1906 or 1911, and the shopkeeper in Lyons will not accept a trolley car concession in lieu of money even if the Soviets are willing to give it to him.

According to Pasvolsky and Moulton’s “Russian Debts and Russian Reconstruction” Russia’s debt to foreign countries and persons amounts to 13,823,000,000 gold roubles “of which 6,681,000,000 is for war borrowing and 7,142,-000,000 gold roubles for pre-war debts both public and private.” These American authors seem to have minimized the accounts; for Professor N. N. Lubimov, in a semi-official Soviet balance sheet, gives them as 9,650,000,000 roubles for pre-war debts (not including debts to Germany, which renounced its claims in the Rapallo Treaty) and 8,846,000,000 roubles for war debts. France contributed the lion share to these bewildering totals. If we will take pre-war obligations only, (for most people have reconciled themselves to the fact that the war debt must be written off as a dead loss) we find that France lent Russia 3,966,000,000 roubles in the form of direct government loans, loans to railroads guaranteed by the state, loans to agricultural banks and to municipalities. The corresponding figure for England is only 640,000,000 roubles. Furthermore, Frenchmen invested to the extent of 732,000,000 roubles in Russian stock companies which the Bolsheviks nationalised, but Englishmen only 500,000,000 roubles. All these French creditors, both government and private, clamor for payment and compensation, but Chicherin declares publicly that “in no case shall we satisfy any of these claims without a loan.”

Franco-Soviet relations, however, have a saving grace. There is a political factor of no small importance which must make for harmony where the economic factor produces dissension and friction. There is no doubt that the Quai D’Or-say would like to draw Russia into the French orbit. The reason has been succinctly formulated by George Chicherin thus: “England always aimed to sow dissension among the Powers on the continent in order not to permit of its domination by any one of them. This explains England’s struggle with Napoleon in the beginning of the 19th century and with Germany in the 20th. Today, France, whose military strength has greatly increased as a result of the world war, presents a similar danger to England. . . . And just when France is about to enter into negotiations with us, the secret thought in the minds of many French statesmen is to establish a political bond with us, and at least to neutralise us in the coming war with England.” This to be sure is putting the matter rather sharply. But that France is anxious to win the good will of Russia in order that Russia may not interfere with her continental policy cannot be doubted.

There is no essential political antagonism between Russia and France, for the oversea dominions of the latter nowhere come in touch with the territory of the former. Moreover, Soviet Russia’s interests in Asia as well as in the Balkans are anti-British; so are French interests in Europe and the Balkans. The ground for some sort of approchment between the two countries is thus prepared.

Gold would best cement such a possible union. Here, however, the United States enters the scene. It is public knowledge that there are few spare francs in French territory. Several times in the past few years the national exchequer in Paris has been forced to knock at the door of the House of Morgan for loans; clearly, therefore, any money that the Soviets might receive from Herriot or his successor would have to come indirectly from our own Wall Street. If that billion-dollar thoroughfare, however, were consumed by an overwhelming desire to open its vaults to the disciples of Lenin it would probably not blush to do so directly. But at this writing no sign of such a burning wish has become apparent.

Before France recognized Russia, Herriot sounded the attitude of the State Department in Washington, only to discover that Secretary Hughes was vehemently opposed to such recognition. Nevertheless Herriot recognized the Soviets on October 28th, 1924. Obviously, then, the urge to resume relations with Moscow was strong enough to warrant the risk of offending the United States. Russia’s desire for an agreement is even greater, and is only augmented by England’s brusque rebuff. The writer knows that Krassin will offer many prizes and consent to many compromises in order to pave the way to an understanding.

What can Russia give? She cannot pay her debts but she can grant concessions. French representatives have been in the Hotel Savoy in Moscow trying to obtain a lease on the rich Emba oil field beyond the Urals. The French are also bidding for the manganese deposit of Georgia and are thus the rivals of W. A. Harriman whose Mr. Elliot has been in Moscow for more than a half year without getting far because he has no diplomatic support. It is also likely that French capitalists will ask for and receive Russian mines and factories to operate on leases.

Then there is trade. Russia’s foreign commerce has been growing by leaps and bounds. In the fiscal year 1920-21 it constituted only 8% of the total for 1913 which was 2,640,-000,000 roubles. In 1923-24 it rose to 21 %. Russia has oil, grain, flax and lumber in excess. She also needs cotton, electrical apparatus, machines, paper, and other commodities from abroad. Today Russia is poor. Little is produced and the means for purchases in foreign countries are meagre. But the countries of Europe realise that these conditions will not last forever; that in a few years, even at the present slow rate of progress, Russia with its one hundred and thirty millions of inhabitants will be a tremendous market, and with her unfathomable resources, equalled ordy by the United States, will be an excellent source for raw material close at hand. France, England, Germany and Italy are already competing for Russian trade, and as time passes the competition grows more intense.

France needs oil for the sea and air fleets which British statesmen fear. Russia has much more oil than she can use now, or for the next fifty years. Recently acquired French riches also present a problem. According to Professor Francis Delaisi, a famous Parisian economist, “the metallurgical factories of Lorraine are working at only 40% capacity and therefore operate at a deficit. On the other hand Russia needs rails, railroad cars, steel bridges.” These are but a few of the economic factors which promote a favorable issue of the Franco-Russian conference. Yet numerous difficulties may produce an opposite effect. There will be the grumbling bondholders. Then Herriot’s fall must be considered. Finally, the Bloc National will raise the cry of Communist propaganda; though, to be sure, Communist activities were conducted in France even before Russia’s recognition.

IV

When it seemed possible that Great Britain would float a Russian loan, the Bolsheviks were inclined to give their orders to England. Now they will probably favor France and give England the cold shoulder. But under ordinary and natural conditions, Russia gravitates towards an economic union with Germany. The figures on this point are eloquent. In the calendar year 1923, Russia’s foreign trade turnover was 349,874,000 roubles gold of which almost one-third (111,026,000 roubles to be exact) was with Germany. But this was only about 10% of the volume of imports and exports from and to Germany in 1913. In other words, there is still room for much improvement, and Berlin is preparing to grasp every opportunity offered it for trade with the Soviets. Germany needs Russian cereals, oil, furs, leather, bristles, lumber, metals. Russia buys from Germany machines, chemicals, and almost every manner of manufactured articles, not excluding products which home factories can turn out in limited quantities.

Moreover, Germany is Russia’s gate to Europe, and Russia is Germany’s door to the Orient. Many of Moscow’s important business deals with foreign firms in France, England and the United States are transacted in Berlin and an appreciable percentage of Russian goods which reach non-German hands are either sold in Germany or pass through Germany. On the other hand, Germany uses Russia as a transit country for much of her commerce with Asia. Russia, after all, is the shortest land route and the cheapest route whether by land or by sea between Europe and China, Japan, and Persia. A letter travels fifteen days from Berlin to Peking if sent via Moscow, but thirty days if it goes on a fast steamer. Germany is the first country in the West to exploit this tremendous advantage.

At present, comparatively little German capital is invested in Russian industries and agriculture; first, because the Soviet authorities have been rather hesitant in offering concessions to any foreign capitalists, and secondly, because Germany has practically no spare capital for use abroad. Nevertheless more concessions have been granted to Germans than to the nationals of any other country, and, generally speaking, Germans bidding for concessions are favored above others, all things being equal. The reason for such treatment lies deep in the nature of Russo-German relations.

Several outstanding influences which moved Russia to adhere to the anti-German entente have disappeared. Austro-Hungary, the Kaiser’s ally and Russia’s bitter enemy in the Balkans has ceased to be. Furthermore, Russia has forever renounced Constantinople and the Straits which the Czar hoped to obtain in the event of a successful war with the German concert of nations in which Turkey was ineluded. These factors making for estrangement have given way to elements tending towards friendship.

Above all else, Germans loathe the Versailles Peace Treaty. It is the most important molder of the life of the German nation and the most irksome. Now Soviet Russia is the only great Power which not only has not recognized that treaty but which, through its leaders, seizes every opportunity of denouncing it. This inevitably creates a close bond of sympathy between the two countries. The men of Versailles created an independent Poland and the Polish corridor which cuts a deep wedge into the heart of Germany. Poland gained a part of Upper Silesia at Germany’s expense. Poland’s task is to watch Germany on the east while France does the same on the west. For all these reasons Germany hates Poland very cordially. But in that respect she does not outdo Russia. Poland is a threat to Germany and to Soviet Russia as well. Therefore both subjects feel themselves drawn together.

How important this relationship between Russia and Germany is in the political future of Europe and the world will easily be seen. When France occupied the Ruhr and the situation in Germany appeared so alarming that people spoke of the intervention of Poland, the Russian government made it clear that if Poland marched on Germany, Russia would march on Poland, thus embroiling all of Europe. In other words, in case of a war or conflict, even Soviet Russia’s neutrality paralyzes Poland and consequently diminishes Germany’s foes by one. The Germans appreciate this circumstance and have no desire of alienating the Bolsheviks though some of the German parties are second to none in despising them. When the question of Germany’s entrance into the League of Nations arose recently the Berlin government made it clear that she would under no condition permit troops of a foreign country to pass across her territory to engage in hostilities against Russia. Actually, and in a way, this makes Germany a bulwark for Russia against the west. Germany is the great obstacle to the perfection of the Anti-Russian Bloc recently formed by Austen Chamberlain, the British Minister for Foreign Affairs.

V

The Anti-Russian Bloc is a new development in European politics but already everybody accepts it as a reality. The British Conservatives are the most stalwart anti-Bolsheviks on earth. Because—Russia imperils their empire. Accordingly the Baldwin cabinet has mobilized the Balkan states, Bulgaria, Yugo-Slavia and Roumania (incidentally antagonising Turkey and causing a rift in the Little Entente), and the Baltic States, Esthonia, Latvia and Finland, against the Soviets. Austen Chamberlain furthermore made a trip to the continent to see Herriot, Mussolini and the Pope on this matter. Herriot apparently received the suggestion rather coldly, condescending, perhaps only to please the British, to start a campaign against Communist propaganda; Mussolini did not respond at all; His Holiness issued an encyclical against Socialism.

The French are not likely to join this bloc. As Steklov, the editor of the “Isvestia,” official organ of the Soviet government, puts it, (and this view can be read between the lines of the Paris dailies) “The real interests of France not only do not demand coordinating her Russian policy with England’s, but dictate very different conduct. Between Russia and England exist certain cardinal points of difference in the sphere of world politics which do not exist between Russia and France.”

Now what is the attitude of Germany to this anti-Russian mobilization? We may approximate the reply by giving the words of Sauerwein, the brilliant editorial writer of the Paris “Matin,” which is generally regarded as the mouthpiece of the French Foreign Office. Incidentally he gives a sketch of the bloc and hints at his own negative attitude towards it. Predicating his article on the statement that the dominating idea of British politics is to form a European Anti-Bolshevik alliance, he says:

“Chamberlain is aiming for a unique treaty of mutual protection against Bolshevik propaganda in Moslem countries. England is also working in the Balkans. Esthonia would never have dared to execute Russian Communists if it had not felt English support behind it. In the same manner, the Soviet government would never have permitted the bloody repressions in Reval if she did not fear England. If England were firmly convinced that Germany will be on the side of the cultured nations of Europe and against Russia she would gladly allow Germany to prepare several thousand pieces of cannon not provided for in the Versailles Pesice Treaty. But England, on the contrary, suspects that the arming of Germany will be used to support the Eastern peoples in the coming colossal struggle between the East and the West.”

The anti-Bolshevik bloc has been joined by the smaller and newer states in Europe. But the larger countries probably feel that if Bolshevism represents a danger to Great Britain’s rule in Asia then she must combat the evil herself. This is a short-sighted policy. But with France jealous and intriguing against England in the Near East, and struggling against British supremacy on the Balkan peninsula; with Italy engaged in a silent tug of war with England in North Africa and resenting John Bull’s control over the Mediterranean which ought to be a “Roman lake,” one cannot expect things to be different for the time being. The difficulty is that the Powers of Europe are too divided among themselves to unite on a common front against a common enemy unless an extraordinary grave crisis arises.

Thus for instance, Italy’s economic interests are definitely pro-Russian. In 1922 Italy imported from Russia goods to the value of 1,352,000 roubles; in 1923 this total jumped to 6,364,000 roubles, and in the first five months of 1924, according to data supplied by the Italian Embassy in Moscow, it reached 8,102,000 roubles. Italy is poor in natural resources but it is a highly developed industrial country. Accordingly her factories must have recourse to the wealth of foreign countries. From Russia Italy obtains oil in increasingly large quantities, manganese ore for steel production, coal, iron, bristles, leather, lumber, and wheat for macaroni making. Italy prefers to purchase the raw materials for her metallurgical system not from Germany which is her competitor in this field but from Russia which is not. This is especially true since Germany would not accept Italian machines or technical appliances as payment, nor would England, for these countries do not need them. Russia does, however. The Italian Fiat machine is keeping the Ford out of the Caucasus, and Italian machines, bicycles and other industrial articles are finding a growing market in Russia.

Italy enjoys the advantage of quick maritime communication with Black Sea ports. There is a regular freight and passenger service between Russia’s southern harbors and Italy and the traffic is becoming heavier, since, in the absence of a Russian mercantile marine, the Soviets must frequently summon the “Lloyd Triestino” and other Roman shipping lines to carry their goods to all parts of the world. Italian vessels, for instance, transport most of the manganese of Tchiaturi in the Soviet Georgian Republic to the United States; also large quantities of Russian export oil are carried in Italian tankers.

Russian imports from Italy are still rather limited and will probably remain so as long as Italian firms cannot offer greater and longer termed credit, and until the Italians grow more accustomed to the difficult and unusual system of Soviet monopolized foreign trade.

Politically there are no inevitable causes for friction between Russia and Italy. In deference to the Bolsheviks, Mussolini declined to recognize Roumania’s title to Bessarabia which is former Russian territory. Russia does not conflict with Italy, nor Italy with Russia, on the question of Turkey, nor, now, on Balkan matters.

VI

We see, therefore, that of the four great Powers of Western Europe, Germany is definitely indisposed to aligning herself on the side of England in the anti-Soviet bloc for she looks to the East for salvation; Italy, on this subject, is more or less independent and indifferent. The fate of Austen Chamberlain’s move against Russia lies, accordingly, in the hands of France. The Franco-Russian negotiations will be watched with much interest especially in America which perhaps holds the key to the situation.

The tie between the United States and England seems to be growing stronger. Both countries have a common policy in China and towards Japan. Financially they are closely knit together. But there is another face to the medal. England’s attitude towards Germany, particularly the determination of the British Conservative government to remain in the Cologne area, may diminish the chances of the success of the Dawes “plan” in which Americans have staked so much. Furthermore, England’s view on the payment of the Interallied debts to America may prevent the United States from receiving a penny from France, Italy and other countries, a circumstance which would no doubt give rise to much resentment against British methods. Will these factors weaken British influence in Washington, or will England be able to persuade our State Department to suggest to France that a rapprochement with the Soviets would be unwelcome? This is the problem; and the moral is: although the United States, rightly or wrongly, refrains from participation in world affairs, the threads leading to the solution of almost all the major diplomatic complications in Europe, as well as in the Far East, can be traced to our own shores.

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