What’s Behind It All

From the Kremlin comes a continual flow of propaganda, spread to the ends of the earth by the international Communist movement, to the effect that the Union of Soviet Socialist Republics is the Champion of Peace.

Stalin’s death afforded the Communists a convenient opportunity to portray a new regime zealous for a peaceful, normal world. They did not say out loud that Stalin had been less zealous, but they were not reluctant to play upon the world’s fervent wish that the new management would turn over a bright new leaf. And they were willing, even eager, for the world to believe that one part of the pursuit of peace was the promotion of East-West trade.

The Kremlin and Peace

Can the so-called Soviet “trade offensive” of 1953-54 really be explained as an effort to establish a just and lasting peace, as the West understands the word? If we could believe that, the world might suddenly seem a more comfortable place to live in. We must always keep the door ajar for any genuine steps to abandon the Soviet brand of imperialism, to abandon the basic unfriendliness of purpose toward everything not under Moscow’s control. The free world was looking for such a movement at the Berlin Conference in the early part of 1954, but it did not show up.

The only way peace could be accepted as a Soviet trading motive would be to define peace as the Soviet leaders themselves have defined it in the past, not in their propaganda but in their party teachings.

“The peace policy of the proletarian state,” according to a Comintern Congress resolution of 1928, “certainly does not imply that the Soviet state has become reconciled with capitalism ... It is merely ... a more advantageous form of fighting capitalism, a form which the U.S.S.R. has consistently employed since the October Revolution.”

Lenin, in a statement which was reprinted in 1943, said that “every ’peace program’ is a deception of the people and piece of hypocrisy unless its principal object is to explain to the masses the need for a revolution, and to support, aid, and develop the revolutionary struggle of the masses that is starting everywhere. ...”

There is no evidence that the new Soviet regime has overnight embraced free-world ideas about peace and warfare. To the disciples of Marx, Lenin, and Stalin, the world is always in a state of warfare. The warfare waged by them is three-fold: psychological, economic, and military. Military action is a last resort, but psychological and economic action never ceases. Stalin did not invent this concept, though he put it into action on a large scale. Nor was it exclusively Russian. The German military philosopher, Clausewitz, whose mid-19th century writings were carefully noted by Lenin and Stalin, wrote: “Disarm your enemy in peace by diplomacy and trade, if you would conquer him more readily on the field of battle.”

A Mixture of Motives

Hence the question arises: Can the Soviet trade offensive be explained as a campaign of “economic warfare”?

That depends on what is meant by economic warfare.

Paradoxically, many people think of economic warfare as meaning economic action in which economic considerations are relatively unimportant, and the gaining of political or psychological advantage is dominant.

If economic warfare is taken in this sense, the answer to our question is “no”. The explanation of the Soviet trade offensive is not that simple. The Soviet Union and its satellites have economic needs. They use foreign trade to serve those needs. We have noted in this report how they determine what imports they want from the free world, and then develop a program of exports to pay for the imports. They are not in the Olympian position of being able to pick and choose these imports and exports solely on the basis of whether the choice will help them deceive, confuse, embarrass, or divide the capitalistic West. Therefore it is a grave oversimplification to assume, as some people do, that the Soviet Communist’s every action in the market places of the world inevitably brings him advantages in international politics.

On the other hand it would be an even greater mistake to assume that economic considerations always govern; that because the Soviet-bloc governments often use normal trading channels and devices they must be looking upon trade through the same eyes as the businessman of Indianapolis, Manchester, or Stockholm; and that politeness at the bargaining table is the undoubted mark of innocently “economic” commerce, free of ulterior motives.

The truth is: Soviet-bloc trading actions are neither purely economic nor purely noneconomic.

The Soviet trade offensive can be explained in terms of economic warfare, if we define economic warfare as economic action by the state that is designed to serve basic hostile objectives directed at another nation or group of nations—whether or not the immediate gains are economic.

Their Objectives Haven’t Changed

In Chapter I, the Soviet bloc’s long-term objectives in its economic relations with the free world were outlined. It was pointed out that these objectives have a dual character: strengthening the bloc and weakening the free-world powers. The objectives were summarized this way:

1. To feed the economy, especially the industrial-military base, with imports that help the bloc become more powerful and less dependent on the free world.
2. To drive wedges among free-world nations at every opportunity.
3. To increase the reliance of free-world nations on the bloc for markets or supplies, and thus make the free world more vulnerable to bloc pressures.

Within this broad framework the Kremlin pursues more immediate and specific goals, such as:

• Obtaining through normal commercial channels the ships, machinery, and other industrial goods which they can produce only at relatively high expenditure of labor and resources—or which they cannot produce at all.
• Obtaining through illicit channels those strategic materials whose shipment is restricted by free-world governments in the interest of their national security.
• Forcing the relaxation of free-world security controls in order to get strategic goods more cheaply and easily and to create dissension among free nations.
• Fostering rivalry among free-world merchants in trading with the bloc, thus reducing the net cost to the bloc of obtaining goods it desires from the West.
• Buying increased quantities of certain consumer goods, though apparently just enough to help with problems within the bloc and to rouse the interest of the West. (Of course it would not take a “trade offensive” to obtain these consumer goods, for they have never been restricted by the West.)
• Selling the West an exaggerated idea of the size and reliability of markets, supplies, and general benefits that can be obtained through East-West trade.
• Making their limited export commodities go as far as possible in solving their import problems without draining vital resources away from their program of forced industrialization.
• Making financial and other economic arrangements in neighboring countries and nonindustrial areas in order (1) to gain more influence and more access to resources there, and (2) to diminish the influence and access to resources of free-world industrial nations.

The foregoing can be recognized, as among the things being attempted in the Soviet “trade offensive” of 1953-54. They did not fall in separate compartments, but were woven together in a central plan and they contributed to one another. They were not so new as some of them might look at first glance. The long-term objectives which they served were not new at all.

Their Practices Haven’t Changed

Some new tactics have been adopted, as we have seen. But even many tactics have more of an old look than a new. Soviet-bloc business practices still clash with Western concepts of normal, peaceful trade relations.

Soviet-bloc representatives have access to many free-world factories, visit docks and inspect merchandise destined for the bloc, maintain offices in commercial centers, receive technical materials from libraries and business firms, and pick up voluminous statistics on free-world resources, production, exports, and imports.

The governments of Soviet-bloc countries do not reciprocate. Although they entertain delegations of diplomats and businessmen and occasionally allow individuals to visit certain places when it serves their purposes, the Western business community in general is barricaded out of their cities, factories, and countrysides, and the peoples of the bloc firmly locked in. Disclosures of even the simplest facts and figures about their economies is a serious crime. They do not enter into the customary international agreements for the protection of patents. Though they claim to have invented almost everything, much of their industrial progress is based on piracy of Western inventions and technology, from the tiny Moskvich automobile to the jet engine. They have failed to settle promptly and adequately claims for confiscation of Western properties and for lend-lease assistance. Furthermore the terms on which they often seek to trade omit customary guarantees of fair dealing. For example, the U.S.S.R is still trying to insert clauses in its East-West contracts requiring that any dispute between the Soviet Government and the free-world businessman be arbitrated by the Chamber of Commerce of the Ministry of Foreign Trade—an organ of the Soviet Government. And as we have already seen, they make every effort to circumvent the export controls of other nations; they pay citizens of those nations to violate the laws of their governments.

The best way to characterize the Soviet “trade offensive” is that the Soviet rulers have improvised for their trade structure a new facade of papier mache but have not reconstructed the interior. In changing circumstances the Kremlin was seeking effective ways of accomplishing the same traditional objectives of feeding its industrial-military machine and weakening the free world.

In the absence of Soviet-bloc policies conducive to furnishing a long-term steady supply of exports desired by free-world countries, the West could hardly expect East-West trade to return to the prewar volume, though a short-term boost would not be surprising. The combined value of the trade in both directions between the free world and the Soviet bloc in Europe was $2.6 billion in 1951 ... $2.4 billion in 1952 ... and about $2.2 billion in 1953. By contrast, total foreign trade within the free world in 1953 was about $148 billion.

It is not only the amount of trade that must be considered, however, and that is why we have devoted attention in this report to what goods were involved and what the new Soviet regime was trying to accomplish.

The Free World Is Strong

What are the implications of all this for the free world?

In the face of the Soviet objectives, methods, and recent trade activities, one can recognize the inadequacy of two extreme policies that are often urged upon Western governments. Those extremes are:

1. Complete embargo on trade with the bloc.

2. Completely unrestricted commercial relations with the bloc.

Complete embargo would be the conventional answer in military conflict. But to urge complete embargo in the present situation is to ignore the fact that the present trade situation offers opportunities to the free world. The free world, with its enormous production, can benefit from trade; the test is what goods are traded and on what terms. The free nations are stronger economically than they have ever been. Collectively they are far stronger than the Soviet bloc. They possess tremendous resources. On the whole they have solid and healthy competitive systems. Their businessmen have behind them centuries of experience in bargaining, merchandising, and servicing. With these factors creating for the free world a currently strong trading position, the free-world nations should be able to take advantage of the needs of the Soviet bloc and by hard bargaining gain benefits from East-West trade.

Completely normal and unrestricted commercial relations with the bloc seem to be equally unsuitable as a course of action.

If the free world should abandon the controls it has imposed in the interest of national security, drop its guard and permit unrestricted trade in all its raw materials, industrial goods, and advanced technology—the free world would be the loser. In view of the Communist objectives and methods, unrestricted trade would permit the bloc to increase its war potential—and specifically the all-important economic base of its war potential—faster than it otherwise could. The goods received by the free world would bring no commensurate return.

If such trade encouraged a general relaxation of the free world military defense, it would be that much more damaging to the free world. In any event, unrestricted trade would permit the Soviet traders to compete freely in Western markets for important strategic goods needed for Western military defense, thus making that defense more costly and difficult for many free-world nations.

Employing the monopoly power of the Soviet states, individually or collectively, the bloc would be able to extract economic advantages and unwarranted concessions from the weaker individual traders and nations to the net detriment of the free world.

Finally, unrestricted commercial relations, in which commercial gain is the overriding criterion, would weaken the free world insofar as they increased the economic reliance of certain free areas upon the bloc. This could be harmful by increasing the vulnerability of these areas to Soviet pressure. It could also have the effect of diverting the attention of the free world from its compelling general economic tasks such as developing bigger, better, and more accessible markets and making international financial and trade arrangements that will diminish the difficulties of sharing the free world’s vast resources and production among the nations.

The Challenge

Thus, the problem and the challenge is to find and to steer a course midstream—to trade with the Soviet bloc on terms which bring to the free world a net advantage. This is no simple matter.

There are two sharp dangers for the free-world nations.

One is the danger of being divided in purpose, split apart on policies requiring concerted action, and forced into competing among themselves in circumstances which call for unified action.

The other is the danger of being deceived about what is going on in East-West trade and what’s behind it. This danger grows partly out of the complexity of economic relations and the fact that the Soviet system and approaches to economic relations and peace in general are so different from ours. It grows partly out of the fact that deception is intentionally practiced by the Soviet Communists.

On the other hand, the Soviet-bloc governments have limitations in trying to accomplish their purposes. The free world, aware of its own strengths, can meet a great part of the challenge by working together not only to understand the Soviet bloc’s general objectives and goals, but also to identify the specific actions which the bloc chooses at any given time to accomplish them. In this way the free world has the opportunity of segregating the harmful from the helpful.

We of the free world will neither be deceived nor divided if we keep ourselves armed with facts and work as a team.

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