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THE demand for mineral raw materials by the so-called "have not" nations has now become one of the major threats to world peace. Though minerals are not the only raw materials sought, they are the spearpoint of the demands for territorial or other concessions. Special reasons inherent in their use and distribution, moreover, make minerals extraordinarily important. In time of peace the expansion of industry steadily increases the demand for them, while preparations for war mean guns, ships, transportation facilities and mechanization in general, on an ever-expanding scale, with a correspondingly enlarged demand for minerals. The world's mineral resources are exhaustible; they are not reproducible; in many cases they occur within a narrow geographic range; they cannot be legislated into existence; substitutions are possible only to a limited degree.
The problem of mineral supplies in its present form is really new, because the scale of modern demand is immensely greater than anything in past history. While hundreds of scattered mineral deposits are still drawn on, the essential part of the world's production now comes from a very few sources which because of their size and location are capable of development on the necessary large scale. There are not enough of these large sources of supply to go around among the nations. In consequence it has been increasingly necessary to ship minerals internationally. The world has plenty of minerals, but no nation has anywhere near enough of all kinds to satisfy the needs of its own industrial development or to complete its preparations for war.
This situation developed so gradually up to the time of the Great War, so little hindrance was put in the way of the movement of minerals between nations, that the degree to which nations were dependent on foreign sources was not fully recognized. Whether national supplies came from domestic sources or from abroad, the assumption was that whatever was needed would be provided through ordinary trade channels. The war brought a rude awakening to the fact that no nation could be sure of a steady supply from abroad. Trade routes were disrupted, substitutions proved costly and inadequate. As for the Central Powers, the acute shortage of essential minerals which they experienced was a very considerable factor in their ultimate defeat.
After the war, then, the industrial nations of the world and the nations which hoped to become industrialized began for the first time to take accurate stock of their mineral positions, with a view to avoiding a repetition of their war experiences. There followed an intensive exploration and development of domestic supplies. In some cases the government operated directly, in others it gave subsidies. Substitutes were developed, export embargoes were set up, and in many countries the exploitation of minerals by foreigners was forbidden. These activities were extended to colonies and mandated areas. Some of the leading industrial countries also intensified their efforts to secure commercial control of essential minerals situated outside their own borders, as illustrated by the efforts of the British to add to their supplies of oil.
Self-sufficiency with regard to mineral supplies is now recognized as one of the main goals of economic nationalism. The drive has reached the stage where industrial nations less well supplied with minerals are demanding the return of lost colonies and the shifting of mandates, and are threatening to occupy -- or have already actually seized -- territories belonging to other countries that contain or are believed to contain mineral reserves.
It is hard to say which is the dominant motive back of the movement for self-sufficiency in mineral supplies -- the desire for a higher standard of living through industrial development, or the desire for military power. The two really go together, because war cannot be successfully fought or a country successfully protected without industrial development.
The leaders of the "have not" minerals group are Germany, Italy and Japan. The principal nations in the group of "haves" are the United States -- the world's greatest owner, producer, seller and consumer of minerals -- and the British Commonwealth of Nations, which is almost as richly endowed as the United States. Together these two Powers, either within their own boundaries or elsewhere, control about three-quarters of the world's mineral supplies; further, they control the seas over which those supplies are carried. Also to be classed as secondary "have" nations are France (including her colonies) and Russia, though the latter is less well endowed in proportion to her needs than is popularly supposed.
Significantly, the "have not" states are governed by dictator-ships, while the two which control over three-fourths of the world's mineral resources are democratic.
Now there is much popular misconception about the results of the effort to attain self-sufficiency in minerals. There have been notable technological advances in the use of low-grade materials, in the extraction of oil from coal, in the creation of new alloys, and in the development of substitutes. But propaganda -- political, commercial and scientific -- has overstated the net results and has seen to it that the limitations and disadvantages are not pointed out. Science and political determination can do wonderful things, but an objective review of achievements to date leads to the conclusion that the attempt to attain autarchy has only slightly lessened the demand on the world's natural supply of minerals and that the huge cost of seeking substitutes largely offsets the advantages claimed. Furthermore, so far as the effort toward self-sufficiency in minerals results in lessening a nation's dependence on foreign sources, it does so at the expense of creating exchange difficulties, which in turn lessen the means available to purchase needed supplies from abroad.
To give point to these generalizations let us look at the situations in Germany, Italy and Japan.
Germany. Before the war, when Lorraine was still a part of the German domain, 92 percent of the nation's iron ore requirements was obtained from domestic sources. Following the loss of Lorraine there began the intensive development of miscellaneous low-grade reserves of iron ore and an increased collection of scrap. These two sources now provide about a third of the total requirements. It is estimated that this proportion can be brought up to about 40 percent. This will mean the use of ores of such extremely low grade that the effort must be heavily subsidized by the government. Already the cost of producing pig iron from domestic ores is estimated at double that from better-grade imported ores; this is due to the higher mining and smelting costs and the heavy expenditure for new plants. Still higher costs are to be expected if even lower-grade ores are used. In short, while Germany has slightly lessened her need of foreign ores, this has been done at excessive cost, and there is no prospect that she can free herself of dependence on foreign sources, principally Sweden, for about 60 percent of her supply. So vital has German dependence on the iron ores of Sweden become that the control of these deposits in case of war begins to loom as an important strategic problem.
Germany is now attempting to restrict imports of oil by developing domestic resources and by manufacturing oil products from coal. The production cost of gasoline originating in Germany is now roughly estimated at four times the world market price. Nevertheless, she is making huge expenditures in the hope of bringing production up to about half of her total requirements. Doubtless this can be done, but the cost will be excessive.
Turning to copper, we find that Germany's domestic production, mainly from the Mansfeld copper district, amounts to about 14 percent of her need. It is hoped to raise this production to nearly 25 percent. The industry is very heavily subsidized by the government, bringing the cost of copper far above the world price. Even so, Germany can never be free of dependence on foreign sources for over three-quarters of her needs. In a further effort to avoid the importation of copper Germany has decreed the substitution of aluminum, magnesium and other light metal alloys wherever possible. This is not left to private choice but is mandatory. To facilitate the process Germany has become the world's largest producer of aluminum and magnesium. But the total effect of these substitutions is only a minor reduction in the quantity of copper needed.
Germany possesses no deposits of commercial-grade manganese ore; but by use of manganese from manganiferous iron ores she hopes to bring up manganese production to about 40 percent of her present requirements. The domestic production of zinc ore has accounted for about 65 percent of requirements; but by development of low-grade deposits and the discovery of a new deposit in the Ruhr district this figure will be brought up to 100 percent. Domestic production of lead amounts to about 35 percent of consumption. Government financial aid in the use of low-grade supplies is expected to reduce present imports of lead and lead ore from two-thirds to one-half of the total national requirements. Germany formerly produced no quicksilver. By opening up low-grade quicksilver ore in an old mine she hopes to supply about 10 percent of her needs. Efforts are being made to replace nickel by substitutes, and a small amount is being produced domestically by government subsidy. But even at best Germany will have to obtain over 90 percent of her nickel from abroad.
But after all these efforts, the net result is that Germany still is dependent on foreign sources -- in some cases for her entire supply -- to fill her normal requirements of aluminum, antimony, chromite, copper, iron, lead, magnesite, manganese ore, mica, nickel, petroleum, phosphates, quicksilver, sulphur, tin and tungsten. Furthermore, as wartime consumption is far above normal, these deficiencies will in such circumstances be even greater. The shortage in iron, oil and copper is the most critical because war requires those minerals in large quantities. Most of the other minerals are used in such small volume that sufficient stocks of them can be accumulated to carry through short periods though not to last out a long war.
Whatever gains Germany has made in augmenting her domestic production of minerals or in developing substitutes have been offset by two factors: added costs and the increased exchange difficulties encountered in securing supplies of those minerals which she must still import from abroad. The attempt to achieve mineral self-sufficiency is merely part of the general movement toward autarchy which, by limiting the international exchange of goods, is reducing Germany's capacity to pay for foreign raw materials. Imports of oil from Venezuela and of miscellaneous minerals from Poland, Czechoslovakia, Austria and Turkey are now possible only because of the willingness of those countries to take German machinery and other products in exchange. The situation is further aggravated by the fact that a large part of Germany's production of raw materials, both mineral and nonmineral, is going into war matériel which cannot be exported for the creation of fresh foreign exchange. The same exchange difficulties also interfere with the acquisition of control over mineral reserves in foreign countries. Even where Germany already owns mines abroad (e.g., zinc in Poland, chromite in Turkey and Jugoslavia, and bauxite in Greece, Italy and Jugoslavia), she still is faced with the problem of exchange.
If Germany's effort to attain mineral self-sufficiency were really making progress she would be pressing less vigorously for the return of colonies and for expansion into Eastern Europe and the Balkans. Precisely because autarchy has not come into being as scheduled, Germany is increasing her demands that, in order to eliminate her exchange difficulties, she be given political control over raw material sources outside her own boundaries.
Italy. Italy's domestic production of iron ore amounts to only about 20 percent of her total consumption of iron and steel. The percentage is being raised by a greater use of pyrite ash, by the utilization of low-grade iron carbonate deposits, through the roasting process, and by the treatment of ancient iron slag deposits. Nevertheless, Italy cannot eliminate her essential dependence on foreign iron sources.
The coal produced in Italy is only about 8 percent of the country's total requirements, and all coking coal for the steel industry must be imported. To reduce imports, a greater use is being made of domestic coal, with its high sulphur and ash content; and electric power is being substituted wherever possible. But any increase in the domestic output of coal will be at a high cost and at best will reduce imports only slightly.
Domestic crude oil production amounts to only 7 percent of the country's requirements. Hydrogenation plants, one of which will use lignite as its principal raw material, are being built. Here again the result will be only a minor increase in domestic production, achieved at high cost and without materially reducing the need for imports. As for copper, Italy produces less than one-half of one percent of her total needs. All possible substitutes are now being used; therefore, dependence on foreign copper sources will continue. Her present need for foreign manganese will, she hopes, be reduced materially by the development of her own very low-grade manganese ores, though here again costs will probably be excessive.
Italy has not been able, then, materially to reduce her dependence on foreign sources for most of her iron ore, coal, copper and crude oil, and for all of her chromite, nickel, tin and tungsten. The critical minerals -- critical because of the large quantities in which they are required -- are coal, copper, iron and oil. And, it is worth noting, each of these is needed in time of war in much larger volume than during peace. The conquest of Ethiopia has brought Italy no mineral resources of importance, nor are the prospects bright that there will be further discoveries in that quarter.
As in the case of Germany, Italy's campaign for autarchy and the resultant scarcity of foreign exchange are making it increasingly difficult for her to purchase the supplies she needs from abroad.
Japan. Japan mines within her own territory only 35 percent of the iron ore she needs to meet her steel requirements. The problem of securing a steady and adequate supply of iron ore imports has not yet been satisfactorily solved. The conquest of Manchuria placed the political control of extensive iron deposits in Japanese lands. But the ores are of very low grade, requiring concentration and yielding a product too high in silica. Japan's recent occupation of North China will add to her resources a very limited supply of fairly good ore. In addition, she has obtained commercial control of small ore reserves in the Philippines, the Malay States, Australia and British Columbia. But in Australia her enterprises are encountering political difficulties, as will probably be the case elsewhere if she tries to expand them.
Japan's domestic coal supply is nearly adequate to her needs when measured in total figures, but it is inadequate in terms of coking coal and anthracite. These deficiencies are being remedied by the extensive use of Manchuria and North China coals, control of which Japan has secured.
Japan produces only about 7 percent of her petroleum needs. At present she is establishing plants in Manchuria for the extraction of oil from shale. She also has a concession in the Soviet part of Sakhalin from which she is obtaining petroleum, and another in Dutch Borneo which is not yet in production. She is also building a plant for the recovery of oil by the hydrogenation of coal. Oil production, refining and importation are all subject to government license, and the important oil companies are required to keep in stock an amount equal to one-half of their imports of each item during each year, such stocks to be sold in case of emergency to the Japanese Government at its own price. The net result of these activities still leaves Japan dependent for the major part of her oil requirements on imports, principally from the Netherlands East Indies and the United States.
Japan has the largest reserves of copper ore in the Orient; she nevertheless has to import a considerable quantity of that mineral.
Japan's critical shortages, then, are in iron ore and oil. These would be especially acute in time of war, though offset to some degree by the accumulation of stocks in time of peace. In addition, she is largely dependent on imports for her aluminum, antimony, chromite, lead, nickel, manganese, phosphates, potash, tin, tungsten and zinc supplies, and to a minor extent for copper. As in the case of Germany and Italy, exchange difficulties are limiting access to foreign supplies, thereby reënforcing the expansionists' demand for the extension of Japanese political control over foreign sources.
It will by now have become clear that the Powers which are deficient in minerals are not making much progress in their attempt to attain autarchy in minerals; that, in fact, their program of economic nationalism is causing them increased difficulties in obtaining the supplies which they continue to need from abroad. Just how much longer they can continue to pay the advancing costs of these needed foreign supplies raises a serious question. The conviction is growing both in the "have" and the "have not" nations that a different course of action will soon be necessary.
Is there any peaceful solution of the problem? Obviously, the most rational course is the restoration of international trade, allowing the free flow of raw materials. There are enough resources in the world to meet the needs of all nations. What is needed is the elimination of all barriers interrupting the easy movement in international trade. Unquestionably, we should bend every effort to effect such a program. But it runs directly counter to the policy of economic nationalism. There is always the chance, of course, that internal revolutions may upset the policies of the aggressive nations or that their rulers may change their minds and follow a new tack. Unfortunately, the evidence is that the autarchic nations intend to persist in their present courses, leading to ever-increasing pressure for territorial expansion -- by war if necessary -- in order to obtain foreign mineral supplies.
The cession of territory on a scale large enough to satisfy the requirements of the "have not" nations would mean the transfer not only of colonies but of important self-governing nations. Simple arithmetic shows that parts of the English-speaking, French and Russian domains would have to be included. Anything short of such a wholesale transfer would still leave the "have not" nations in an inferior position in regard to mineral supplies. Their efforts to obtain them -- by one means or another -- would presumably continue.
The United States cannot escape being vitally concerned in this problem because of its leading position in the production, distribution and consumption of the world's raw materials, and because of the hazard involved in any attempt to maintain neutral shipping rights. The self-sufficiency of the United States in raw materials is relative, not absolute. If all our imports were cut off, our industry would indeed return to the "horse and buggy" days. We could build neither an automobile or a battleship. Our deficiencies are mainly in the so-called ferro-alloy group of minerals used in the steel industry, including chromite, manganese, nickel, tin and tungsten. There is also a lack of antimony, mercury, certain varieties of mica and graphite, as well as of other minerals. No one has yet found an adequate steel-making process which can dispense with manganese even though only fifteen pounds of this mineral are required in each ton of finished steel. The ramified interrelations of the use of all of these minerals are so complex in modern industry that the lack of a single one often has far-reaching consequences. Most attempts to remedy our mineral deficiencies by applying new technologies to our submarginal deposits have thus far been unsuccessful. Intensification of these experiments would most likely lead only to the same difficulties which the autarchic nations are experiencing.
A possible course of action still remains, one that has received little public discussion but which nevertheless may come decidedly to the fore in the near future. I refer to the use which the democratic countries can make of their possession of the major part of the world's mineral resources, together with their control of the sea, to maintain, by force if necessary, a modicum of law and order in the world.
The idea of mineral sanctions has been ably championed by General Smuts, Sir Thomas Holland and others, but as yet it is little understood by the public in any country. The traditional assumption that military power is to be measured largely by population has delayed recognition of the fact that in reality the possession of great natural resources has concentrated in a small handful of states the power to sustain a long war. The rest of the countries in the world, regardless of their great areas and population, simply cannot build up their war power to more than a small fraction of that of the dominant group. The question is: How can this power be used collectively on behalf of peace? Small as this dominant group is, it contains highly diverse national interests which very likely cannot be harmonized except under the compelling psychology of war. A realistic view of the international minerals situation nevertheless seems to indicate that sooner or later war may have to be fought collectively by the "have" nations if they are to preserve their material (not to mention ideological) positions. In view of that fact, is there not some way to use the great power that lies in our hands to preserve world order and to limit or perhaps even deter aggression? The democratic Powers possess the might necessary to uphold their interpretation of the right. Are they willing to use it?
Mineral sanctions belong to the general category of economic sanctions provided for in Article XVI of the League Covenant. However, in order to be effective, mineral sanctions would not necessarily have to be identified with the procedure in Article XVI nor need they be applied by any states but the United States and the British Commonwealth of Nations, supplemented perhaps by France and Russia. True, sanctions failed against Italy; but that was because they were badly planned and only partially enforced. That experience shows the difficulties to be overcome, but it by no means disproves the effectiveness of sanctions that are carefully devised and sternly applied. If mineral sanctions are to be effective, time must be taken in advance for exhaustive planning. The plan must take into account the peculiar mineral needs of the various nations and the foreign sources from which they are supplied, together with steps to be taken to counteract all attempts to defeat the sanction by substitutions, by the accumulation of ore stocks in advance, by indirect channels of access through countries not parties to the plan, and by other means. The problem admittedly is difficult. Yet enough work has already been done on it to indicate the reasonable probability that mineral sanctions can be made effective.
I am not attempting to formulate a panacea for war. My purpose is rather to call attention to the fact that minerals have become a leading cause of world unrest; that nature's distribution of mineral deposits confers immense potential power on a few nations; that possession of these minerals by these few nations may force them to use that power in self defense; that this raises the further question whether such power may not be used affirmatively and collectively to maintain world order; and that the time has come for a general study of how this might be done effectively. I cannot too strongly emphasize that the United States, because of its leading mineral position, is directly and inevitably involved in this matter, and that it and the British Commonwealth have jointly the greatest responsibility for finding a wise and practicable solution.