Isaac Deutscher 1952

Moscow: Behind The Outstretched Hand

Source: The Reporter, 24 June 1952. Scanned and prepared for the Marxist Internet Archive by Paul Flewers.

‘We are going to this International Economic Conference as merchants, not as Communists’, Lenin told the Soviet diplomats who went to Genoa in April and May 1922. As if to celebrate the thirtieth anniversary of that event – the Russians love such commemorations – the Politburo decided to convene an ‘International Economic Conference’ in Moscow for the first half of April 1952.

One might say that while the original conference was a serious event, its imitation was farcical. In 1922, the Soviet government did in fact negotiate with Western governments about resuming trade. No results were reached immediately, but in the last analysis the Genoa conference brought an end to the West’s economic blockade of Russia.

At the recent Moscow conference, among the nearly 350 delegates from forty-odd countries who assembled in the impressive Trade Union Hall, only one delegate officially represented a Western nation – and that was the Argentina of Juan Perón. Most delegates had little or no practical experience in international trade and little or no influence on the trade policies of their countries. They were journalists, academic economists, politicians, philanthropists and nondescript self-styled ‘intellectuals’ of the sort who are usually prominent at Moscow-sponsored conferences. Only the eminent Dean of Canterbury was absent.

There was also a sprinkling of businessmen, none of whom represented any leading Western concern. In the course of a fortnight, this somewhat amateurish group discussed trade among Eastern and Western countries, adopted resolutions, and with quite serious mien signed scores of ‘trade contracts’. When the delegates returned home they could not agree even among themselves about the immense sums to which the contracts amounted.

The Ulterior Motive

Yet it would be a mistake to see only the farcical side of the show. The conference is having serious repercussions; and it was for the sake of these repercussions that the Russians arranged it.

This was the first propaganda battle of a larger offensive that the Russians have launched against the US Battle Act, which prohibits countries receiving Marshall Aid or other American assistance to sell materials and goods of strategic importance to the Russian bloc. The list of prohibited goods contains over three hundred items and includes, apart from armaments proper, metal, raw materials and capital goods.

It should be admitted that the Russians have waged this battle with a shrewdness, subtlety and discretion rarely found in their propaganda campaigns. The conference adopted no political resolutions. No direct and open attack was launched against any Western country or government, not even against the United States. The erstwhile ‘monopoly capitalists’ of the West were politely referred to as ‘Western business circles’. The Battle Act itself was hardly ever mentioned. The Russian press gave fair reports on the speeches of the Western delegates, even those that defended Marshall Aid.

The main theme of the conference was the need for the resumption of trade between East and West. ‘Business as Usual’ was the slogan which this time resounded from Moscow. The theme and the slogan have their indubitable appeal, especially in those Western European countries whose well-being has in the past depended to a degree on trade with the East. For West Germany and Western Austria this issue has been especially vital, because for them it is no longer a matter of foreign trade only but of the revival of their own domestic trade.

The Psychological Moment

The timing of the conference was extremely shrewd. Western Europe had reached an economic turning point. The rearmament programmes there have undoubtedly stimulated economic activity. It is possible that without this stimulus the Western European economy would by now have been in the throes of a normal cyclical slump. But the stimulus has worked one-sidedly. Whereas Western Europe’s heavy industries are producing at full pressure and are assured of an expanding demand for the next few years, its consumer industries have experienced something like a recession.

European rearmament, unlike American rearmament, is not accompanied by a rising demand for consumer goods. On the contrary, that demand has been shrinking, or has at best been stationary. Yet in the course of seven postwar years the consumer industries have reached very high levels of output, and they are overproducing in relation to their shrinking or stationary markets. For the first time since the great depression of the early 1930s, the textile mills of Lancashire are idle; and the British public is anxiously watching the unemployment statistics from week to week. The same is true of consumer industries in France, Italy and Belgium.

The numbers of unemployed are still low by the standards of the great depression. Moreover, for the rearmament economy as a whole, this time of semi-boom, semi-slump has advantages: idle consumer industries are releasing manpower and materials that will be needed badly in the industries working directly or indirectly for rearmament. All the same, the semi-slump is having an immediate impact upon the minds of Europeans. Since the depression a new generation has grown up which has known war, hunger and underproduction, but it has never been haunted by unemployment in the old form. Young Western Europeans have come to believe that the world has somehow learned to deal with the vagaries of the ‘old-fashioned’ trade cycle. The fact that in some industries there is overproduction once again comes to them as a severe shock. ‘Are we going to be reduced to living on the dole, as our parents were?’ many a Western European worker asks anxiously.

And here come the Russians offering trade, which looks to some like a partial way out of the predicament, and to the more naďve like a panacea. No wonder that the Moscow conference and the trade proposals made there have loomed very large in nearly the whole European press. What could be more simple, the jobless man in Manchester and Lyons feels, than that our unsalable stocks of cotton textiles and silks should be exported to Russia, Poland or Hungary, and that our mills should start working again?

The Russians have addressed their offers not only to Western Europe. The delegates from the Middle and Near East and from South-East Asia were presented in Moscow with a Soviet version of the Point Four programme. MV Nesterov, Chairman of the Soviet Chamber of Commerce and chief Russian spokesman at the conference, stated that the Soviet Union was ready to supply industrial plants and machinery to the amount of three billion roubles to countries of South-East Asia and the Middle East, and to give those countries technical assistance and advice in their industrial development. Nesterov further pointed out that the armaments race defeats all plans for the development of the industrially backward parts of the world. Those engaged in the armament race, he said, cannot supply the underdeveloped nations with industrial equipment because they need it for their own rearmament. Without that equipment, all development schemes concerning Asia and Africa are meaningless. This argument, cogent as it is, applies, of course, to Russian as well as Western rearmament, but Nesterov was probably able to make an impression in Asia and Africa.

Departure from Self-Sufficiency

Are the Russians really prepared to expand their foreign trade, or are they merely out to score propaganda points? Are they, in particular, prepared to buy consumer goods from the West?

Sceptics point to two sets of facts. First, Russia hitherto has adhered rigorously to a policy of self-sufficiency, and there is no reason to suppose that it seriously intends to depart from that policy. Second, Western Europe has been only too willing to sell consumer goods, on which the Battle Act places no embargo; and if Russia had wanted to import them, it could have done so at any time, without any propaganda sideshows.

Yet it is quite probable, in the view of the writer, that Russia is prepared to intensify and expand its foreign trade. But it is prepared to do so on its own terms, that is, if it can make a wide breach in the semi-blockade that the Battle Act has imposed. The Moscow conference was meant to rally Western European opinion, or as large a section of it as possible, behind that policy.

Russia’s economic development seems to have reached a point at which a departure from self-sufficiency may be both possible and desirable. This departure has already begun. Nesterov revealed that the volume of Russia’s ‘foreign trade’ is three time as large as it was before the war. Most of this ‘trade’ has been conducted within the Soviet bloc. For the first time, Russia has surpluses of industrial manufactures and is anxious to sell them. The Soviets have been exporting heavy and light engineering machinery to Eastern Europe and China. Among the Russian export items listed at the conference were agricultural machinery, fertilisers and light industrial goods. In the postwar years Russia appears to have saturated, for a time, its domestic demands for some kinds of agricultural machinery, a fact for which there has been no precedent in Russian economic history. As a by-product of the rapid industrialisation of the post-war years there has begun to appear in Russia that interest in foreign markets which is the usual concomitant of industrialisation.

A certain change in the Russian import policy is also quite probable. Hitherto the Russians have imported capital goods almost exclusively; but at their present more advanced stage of development they may be impelled to import consumer goods, of which their domestic production has been inadequate, and for which they may well afford to pay.

The Bill of Goods

There was therefore nothing implausible in Nesterov’s statement that Russia was ready to treble its trade with the West, and to multiply five or six times its trade with some countries – for instance France, with whom its commercial contacts have become negligible. But the purpose of this declaration became evident only when Nesterov went on to list the goods that Russia would like to import. Invariably his lists included, apart from consumer goods, the metals, raw materials, chemicals and manufactures that come under the Battle Act embargo.

The Western countries were in effect told by Russia: ‘We are ready to buy your textiles, silks and shoes, for which you have no markets, but only if you sell us also the goods you are not allowed to sell us. If you refuse to do so, you will plunge your consumer industries deeper into the slump, and for that you will have to thank your American allies.’

There is no denying that this manner of posing the question has placed the governments and the political and economic leaders of Western Europe in a quandary.

The Battle Act is now unpopular in Europe not only among pro-Soviet or neutralist elements but even among those who have wholeheartedly accepted its military-political premises. There is a widespread conviction that the embargo has been extended to many goods of little or no strategic importance, or at any rate to goods that would add to the military potential of the Soviet bloc no more than the imports from the Soviet bloc would add to the military potential of Western Europe. The Western European governments have submitted to the Battle Act with the feeling that strategic policy is sometimes used to throttle legitimate trade. The Moscow conference has done something to stir and spread this feeling and to create pressure for a liberalisation of trade.

Western Reaction

This pressure comes primarily from consumer industries. No sooner had the Moscow conference closed than a hundred British textile firms chartered planes to fly samples of their goods to Russia. Manchester has watched the conference and its sequel with intense interest and some hope. So have many French and Belgian industrialists who refused to go to Moscow for the curious reason that if they went they might have deprived themselves of entry visas to the United States. Le Monde of Paris writes:

Need one necessarily condemn businessmen who think that it is not unreasonable at least to hope that commerce between Eastern and Western Europe may recover to the pre-war level? It is sad to say that by a supreme irony the Soviet bloc may yet steal from the West the theme of the advantages of commerce and of free exchange, just as it has managed, because of the lack of political intelligence in the West, to steal the theme of peace.

The most significant reaction to the Moscow conference came, however, from Bonn. No Western European government is more vitally interested in the United States’ presence in Europe, and none would be thrown into greater panic at any sign of a softening in the American attitude towards Russia than the government of Dr Adenauer. Yet in Bonn both the government parties and the opposition have agreed to demand for West Germany the right to conduct trade negotiations and to sign contracts with the Soviet bloc. The Committee for Foreign Affairs in the parliament of the Federal Republic has agreed on a formal resolution that trade with Eastern Europe is a necessity for West Germany, and that it should therefore be given complete freedom to trade with the Soviet bloc. These resolutions have undoubtedly come in response to the suggestion thrown out from Moscow that trade between Russia and West Germany might be increased to two billion roubles.

Among the baits held out by the Russians, one is especially alluring to Western Europeans, who are constantly harassed and exasperated by the problem of the dollar gap.

‘If you trade with us’, the Russians say, ‘you will have no rouble gap, because we shall let you pay for your imports with your exports.’ All this is undoubtedly moonshine, but it has thrown into sharper relief the issue of the dollar gap. On the day after the Moscow conference, Mr Churchill’s government had to protest to the State Department against demands of American manufacturers for the raising of some American tariffs that would bar British goods from United States markets.

‘The Americans cannot have it both ways’, people even in the most pro-American circles in Western Europe are saying. ‘They cannot simultaneously deny us trade with both the USA and the USSR.’