Spies and Commissars: The Bolshevik Revolution and the West (45 page)

The Kremlin advertised its plan to pay for imports with its gold reserves and to sell Russian natural resources to the highest bidders. Western businessmen flocked to Tallinn. Many were not distinguished by their honesty, but all of them were willing to take the gamble of investing in Russia’s international trade. In fact the goods traffic to Petrograd outweighed what went in the opposite direction by a factor of ten to one. Urban Russia remained unproductive and the villages were no longer covering the country’s requirements. Flax and veneers were practically all that the People’s Commissariat of Foreign Trade could lay its hands on for sale abroad.
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According to the Estonians, a third of Russian imports consisted of agricultural machinery and equipment.
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Traditionally Russia had exported food, paper and leather to Europe, but now these items had to be bought abroad.
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The Estonians were happy to oblige. Estonia had barely started to recover from war and revolution and its ministers now judged it in the national interest to enable the Russians to acquire the products they wanted. The transit fees were too valuable to be ignored.

Soviet leaders continued to press for recognition by the Allies. At the end of 1919 Litvinov affected surprise that the Bullitt proposals of earlier months had not been acted upon. This was nonsense: Lenin on his side had never been genuinely committed to ending the Civil War except with a Red victory. Litvinov was really trying to appeal to all those lobbies in the West which might be tempted to trade with Soviet Russia. And a sequence of events appeared to confirm that the ice was beginning to crack. In mid-January 1920 Radek was released from German custody and sent back to Russia across Poland. He had by then decided that the ‘European socialist revolution’ was not going to happen very quickly, but he thought that his own liberation indicated the growing willingness of German ministers to adopt a gentler line in their Russian policy. The Soviet leadership made its own moves in the same period. On 7 March the Cheka resolved upon a mass release of seventy-four prisoners with English names from its prisons and camps.
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The purpose was easy to guess. The Bolsheviks had identified the United Kingdom as the likeliest of the great powers to come to an accommodation immediately after the war. A show of goodwill might be useful before negotiations commenced.

But even though Lloyd George was eager for commerce to be resumed, it would take time for him to clear away the political obstacles. The next move for Soviet leaders was therefore to set their caps at Sweden. The Swedes themselves wanted a share of the Russian trade and had industrial products for sale. Lev Krasin, who in 1918 had served in the Soviet mission in Berlin, joined Litvinov in Stockholm on 1 April 1920. While Litvinov handled the diplomacy, Krasin would lead any talks on trade. Krasin himself was viewed favourably in Europe – by some at least. The
Manchester Guardian
had picked him out as a man to be trusted, its Moscow correspondent W. T. Goode offering this warm portrait: ‘In the prime of his powers, sparkling with energy, Krassin [
sic
] is a well-set-up man, with black hair and full beard, a dark but bright complexion, and an engaging man. He is supremely competent, and his personality and conversation convey that impression swiftly to those with whom he speaks.’
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Having worked in Germany and Russia before 1917 as a manager in the Siemens-Schuckert company, Krasin had an intimate experience of industry. His post in 1920 was as People’s Commissar of Foreign Trade. His assignment abroad was to help start the Russian economic recovery by selling off manufacturing and mining concessions. Concentrating on the Scandinavians, Krasin now set out to drive a wedge into world ‘capitalist imperialism’ as Lenin had demanded. The plan was to use foreign capital for the benefit of communism in Russia.

For this to happen, a degree of subterfuge was required. Most countries were still reluctant to hold talks with Bolshevik Russia, so Sovnarkom sent out its envoys in the guise of leaders of the Russian co-operative movement.
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It was blatant hypocrisy. Bolsheviks in Russia treated co-ops as suspect organizations that sheltered enemies of the October Revolution. But foreigners who spoke to Krasin could now more easily shrug off criticism that they were talking to a communist state official. An atmosphere of friendliness and confidence was fostered in Scandinavia as the negotiations got under way. Swedish and Danish entrepreneurs put pressure on their government to facilitate trade agreements. The race was joined to re-enter the Russian trade. It was won by Denmark, which signed a treaty on 1 May. A copy was forwarded to the Allied embassies in Copenhagen so that political leaders might understand that any slowness in settling with Soviet Russia would lose them a lot of money.
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Krasin was pleased by how quickly Armstrong Whitworth, one of Britain’s largest metallurgical companies, sent people to Scandinavia to open talks
with a view to agreeing a contract. And as a queue of Western businessmen lined up to meet him, he was kept very busy.
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The next stage of the Soviet leadership’s plan was to send a section of their trade delegation to London to negotiate a treaty with Lloyd George. There was a temporary halt in proceedings when the British refused Litvinov a visa on account of his anti-war propaganda activity two years earlier.
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The Soviet delegation reacted by cancelling all talks with British businessmen and threatened to call off any trip to the United Kingdom.
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But this was only a bluff since Krasin had never been one of Litvinov’s admirers. Having always found Litvinov pedantic and painful to work with, he was more than content to proceed to London without him.
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In any case, the priority for the Soviet leadership was to start up the talks. And when Theodore Rothstein was refused permission to enter the United Kingdom there was no reaction from Moscow.
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Moreover, the British for their part wanted to appear flexible and allowed Litvinov’s friend Nikolai Klyshko to return to the United Kingdom as Krasin’s interpreter and chief of staff. Klyshko had worked for Vickers Ltd before the war, his English was good and he had plenty of British personal contacts.
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Sovnarkom had been officially committed to its concessions policy since mid-1918, but it was only now, in peacetime, that it stood any chance of being implemented. Krasin was empowered to put up mines, forests, railways and telephone networks for auction to the highest bidders in the West. The sole stipulation in the Supreme Council of the People’s Economy was that no foreign firm should gain a monopoly. Economic necessity called for instant action and Russian industrial recovery would benefit from external assistance.
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Lenin and Trotsky promoted the initiative, inviting the world’s capitalists to make their profits again in Russia so that the communist party might rebuild Russia’s shattered economy. Before 1917 they had denounced the Nobel Oil Company as the greedy and ruthless exploiter of the petrochemical resources of the Baku fields. But oil was almost the only means of industrial employment in Azerbaijan, so Lenin now wanted the Nobel family to come back with their technical expertise and financial resources. He was also ready to welcome Krupp, a company reviled by communists as a supporter of German militarism, to southern Russia to regenerate agriculture. Having handed the landed estates to the Russian peasantry in the October Revolution, he intended to grab them back so that foreign
capitalists could modernize them and make profits for themselves and for the Kremlin.
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Trotsky was equally active in this cause and knew how to appeal to foreign businesses. When he gave an interview to the American reporter Lincoln Eyre, he emphasized that Russia aimed to re-enter the world economy and buy foreign machinery.
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One of Trotsky’s protégés, the dapper Viktor Kopp, was reported as being in Berlin and Copenhagen.
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Kopp duly did the rounds of Krupp, Voss and other leading industrial companies. The overtures had a tempting logic. The Paris Peace Conference had severely restricted the size of the German armed forces for the foreseeable future. German metallurgical enterprises had expanded immensely in 1914–18 in response to the state’s military requirements, and Krupp and its rivals had yet to find a substitute purchaser of its armaments. By treating Soviet Russia as a pariah state, the Allied powers freed it to act entirely as it wished; and there was nothing in the Versailles treaty to stop German industry from signing contracts with the Russian communist leadership: Kopp had the authority to negotiate on this basis. Moscow had not abandoned its ultimate revolutionary goals. But until such time as the German Communist Party seized power in Berlin, Trotsky was happy to use Germany’s capitalism to enhance Soviet military security.

Lloyd George had no intention of letting the Germans overtake the British, but his ideas were opposed by Churchill, who wrote to him on 24 March 1920: ‘Since the Armistice my policy would have been “Peace with the German people, war on the Bolshevik tyranny.” Willingly or unavoidably, you have followed something very near the reverse.’
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While eschewing Churchill’s combative rhetoric, the other Western governments bridled at Lloyd George’s softness towards communist Russia. French ministers were the first to express doubts about any accommodation with Soviet commercial requests. They continued to draw attention to the losses incurred by France’s private bondholders as the result of Lenin’s unilateral annulment of Russian state debts. In America opinion was divided and the political situation was unstable. Woodrow Wilson was chronically ill and no longer handled the main diplomatic levers, and no clear policy emerged from the State Department.

The British cabinet proceeded with caution. Lloyd George wanted to keep a good bargaining position and could see that over-eagerness would be counter-productive. The Kremlin leaders were to be made
to appreciate that they would get no treaty unless they complied with his demands. Lloyd George also needed to avoid unduly annoying the French government or alarming Washington – and he hoped to placate the Conservative MPs in his governing coalition. Nonetheless he remained confident that trade with Russia was in Britain’s best interests. He was being strenuously lobbied by influential business sectors as well as by the moderate political left in favour of a treaty. The Prime Minister believed that Russia’s reincorporation into the world community of nations would enhance peace, employment and prosperity in Britain and the rest of Europe. He also thought that the Russian people would drop any lingering preference for communism once there was a resumption of trade. When goods flowed into Soviet territory it would quickly become obvious that capitalism was better at producing a decent standard of living. Communism would shrivel in the Russian ground as Soviet rule collapsed. Although Lloyd George did not predict how this outcome would be achieved, he was confident that capitalism would introduce a fatal infection into Lenin’s regime. The Bolsheviks, he considered, would ultimately pay dearly for his fanaticism and the globe would be rid of the pestilence of the October Revolution.

Krasin arrived in London on 27 May 1920.
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Among the sticking points was the Soviet government’s desire to make its purchases in gold. The British government continued to contest the Bolshevik seizure of foreign assets in Russian bank vaults; the bullion stocks in Red hands were widely considered to be tainted and it was going to be tricky for Lloyd George to get round the problem without public controversy. Krasin also had to answer questions about Russia’s outstanding state loans, which had been unilaterally annulled by Sovnarkom on 3 February 1918. The
New York Times
characterized the emerging British policy as ‘buying off a dangerous enemy’.
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French newspapers also complained that the Soviet delegation’s decision to make for London and avoid Paris showed that Lloyd George was betraying the joint responsibilities of the Allies.
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Yet public opinion in France was no more hopeful about the Americans. The suspicion was that if the British decided to withdraw from the Russian talks, Washington might step in quickly and sign a commercial treaty with Moscow.
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It was not just politicians in Britain and abroad who had doubts about Krasin; many businessmen too were not happy to welcome him. Krasin learned this directly when he was harangued in his hotel
by an entrepreneur who been arrested by the Cheka and forced to hand over his English pounds for rubles, a currency without exchange value abroad.
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A court case was also brought against Krasin for trying to sell Russian timber to a British firm. The plaintiff claimed that his own stocks of timber had been seized without compensation in 1918 and the communist authorities were making illicit profit from them. Although the case moved sluggishly through the judicial system, no one was in any doubt about the possible consequences. If judgement went against the Soviet government, a torrent of such cases might be let loose as disgruntled owners and investors sought financial redress.
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Krasin’s travails continued when the British industrialist Leslie Urquhart began to pester him. Urquhart had advocated the maintenance of business links with Russia after October 1917; but in mid-1918, on a trip to Moscow, he was threatened with imprisonment as a spy. If he had not been fluent in Russian, he might not have been able to extricate himself and repair to safety in northern Russia, from where he departed for the United Kingdom. He was less fortunate with his property because the communists had expropriated his large Russian mining and smelting company – and Urquhart did not intend to let Krasin forget this.
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