Donbass industry was created as a result of Western sanctions a hundred years ago


January 30, 2015
Valentin Katasonov, Doctor of Economics, Professor at MGIMO
 Poznavatelnoe TV – Youtube
Translated by Kristina Rus

Donbass Coal Mining Soviet Poster

Q. Your book “The Secrets of Stalin’s Industrialization” has certain mystery about where did Stalin get the resources and where did the idea for industrialization come from? Were these ideas borrowed from the tsar Nicholas the II?

V.K.: 10,000 enterprises were built. As far as plans for industrialization at the beginning of the 20th century… The then Minister of Finance, he was practically a Prime Minister of the Russian Government – Sergey Vitte always talked about industrialization. Although he used different words, the term “industrialization” was not common back then. But Sergey Vitte concieved a different type of industrialization.

Is light and food manufacturing – industrialization? Yes. Is black metalury – industrialization? Yes. But what Vitte offered and did, was industrialization that was beneficial to the countries of “the civilized world” –  England, France, America, Germany. He was serving the interests of foreign investors. Without a doubt, foreign investors were eager to enter Russia. They knew which industries they wanted to enter.  They wanted to go into coal mining, black metallurgy, lumber, partially textile manufacturing, but mostly of course, energy and material intensive industries.

This was not the industrialization that was talked about in December 1925, the 14th session of VKPB were the task of industrialization was first announced. But from the beginning this task was proposed as total industrialization with a goal of total independence of the country. Before this moment, and even after 1925, economic and credit blockade continued. The country was choking, and it had to become self-sufficient. And this industrialization fulfilled this main task. By the beginning of the Great Patriotic War the share of exports in relation to GDP of the USSR was only 1.5 -2%, same with import. We practically became an independent country, and only due to that we were able to withstand and win the Great Patriotic War. This is what’s important.

As far as what was offered at the beginning of the 20th century – Nicholas the II didn’t concern himself with such issues, this was not the idea of Nicholas the II, it was an idea of Sergey Vitte. Vitte had to clear the road for foreign investors and make ruble a convertible currency. Convertible currency is needed for what? To create guarantees for the financial marauders to come here, plunder and withdraw it. Without convertible currency there are no such opportunities. And a convertible currency is a golden ruble.

This was not industrialization, this was certain ideas, about which separate elements of economic potential of Russia should be developed in the interests of foreign investors.

Please pay attention that one of the main accomplishments of Vitte was the construction of the Trans-Siberial railroad. But his main goal was to provide the foreign investors with logistics for withdrawing the resources out.

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This was not the industrialization that would help Russia become a sovereign state.

Why did the blockade happen? It was not because the Bolsheviks came with their own ideas of building God’s kingdom on earth. The West was outraged by certain decisions of the Bolsheviks. There were two concrete decisions which outraged them immensely. First: A refusal to pay back the credits taken by Russia before and during the war. Very big money. At Genoa conference they gave us a bill for 18 billion golden rubles And second, which they were outraged with – is nationalization of foreign assets. This served, formally or not, but as a basis for the February 1918 declaration of sea and trade blockade of the Soviet Russia.

So politics, ideology was not as important? 

For them it is more important whether Russia is sovereign or colonial. Which flag will it be under – monarchy, socialism, anarchy, this is a question of a second or third level.

Translator’s Note:

Ironically the latest round of Western sanctions is punishment of Russia for trying to help it’s former countrymen defend the legacy that was created as a result of Western sanctions nearly a century ago. The legacy which Russia built and Ukraine is trying to destroy to deprive Donbass of economic means of existence. A hundred years ago a desire to punish Russia for choosing a course independent from the West turned it into an industrial powerhouse and a second largest economy in the world. Ukraine-EU association agreement goes after those assets from the Soviet legacy to take them out of the balance of the world markets. Perhaps the Western “partners” did not learn anything from history, which showed the Russian spirit and resilience flourishing under pressure.

Sanctions is precisely the medicine that Russia needs to reduce its dependence on the West, explore other markets and relationships, consolidate and focus on internal development. A hundred years later Russia has stepped on the same rake – after making itself too vulnerable to the West, it is turning towards the untapped internal capacity once again. But the difference is the “third world” has come a long way and became a much more defiant player, and the stronger the rest of the world becomes, the less powerful is the West, bringing new markets and mutually beneficial opportunities for Russia.

Perhaps we are about to witness Russia on the verge of another historical leap, which will sweep it and it’s closest allies into a new era, but without the excesses of Stalinism.

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