THE revolution which precipitated Russia's industrialization coincided with the opening of an equally new phase in the history of the neighboring Asiatic countries: Turkey, Iran, Afghanistan, Sinkiang (Chinese Turkistan) and Outer Mongolia. The transformation that took place in these countries during the decade following the Soviet Revolution greatly facilitated contacts between them and the new Russia. Strongly nationalistic governments with a taste for westernization stepped into the shoes of the Sultan, the Shah and the Amir.

Turkey, for example, under Mustafa Kamâl Atatürk has initiated a Five Year Plan of Industrialization which is no less a reality than the more widely advertised and portentous Five Year Plan of Soviet Russia. Iran has sent a hundred students abroad annually for the last seven years to absorb western science and technology and like Turkey has undertaken schemes of industrialization. Changes in Afghanistan also show which way the wind is blowing in that part of the world. The fanatical opposition which wrecked Amanullah's progressive plans in 1928-1929 has now abated and the present rulers of the country are carrying through more discreetly a number of interesting reforms. Important public works, including a wireless station expected to cost £29,000, are being constructed near Kabul;[i] while the commercial activities of the recently founded Afghan National Bank will undoubtedly revolutionize the country's mediæval trading methods.

And so Soviet Russia, though scarcely passed beyond the apprentice stage herself, now finds conditions extremely propitious for participating in the economic development of her southern and eastern neighbors. Her trump card in these contacts is geography, save where political considerations happen to be adverse.[ii] A glance at the map shows how comparatively easy communications are between Asiatic Russia and many points in non-Soviet Asia otherwise difficult of access, such as northern Afghanistan, northern Iran (pending the completion of the Trans-Iranian railway) and Sinkiang via the Ili Pass.

A study of Soviet policy in this region will reveal its great adaptability to the particular conditions encountered across each sector of the frontier.

II. TURKEY

In general, economic questions were not of primary importance to the Ottoman Government; consequently, under the rule of the Sultans neither the agricultural nor mineral wealth of Turkey was exploited and the country remained almost entirely undeveloped industrially. Before the War political mistrust barred the way to any coöperation with Russia in the utilization of Turkey's raw materials. But today the Angora Government is actively engaged in the development of Turkish resources and a Five Year Plan of Industrialization has been in operation since 1932.[iii] As a result the country has in a short time become self-sufficient in coal, sugar and cement, all formerly on the import list. She has also taken steps to produce her entire domestic demand for cotton textiles. The establishment of this Turkish cotton industry is one of the leading achievements of the Five Year Plan, and in this Soviet technical experts coöperated. A Turkish economic mission visited the U. S. S. R. in 1933 to inspect Soviet factories and to purchase the necessary machinery for the new Turkish textile combine. A group of Soviet textile experts returned to Turkey with this mission to supervise the execution of these plans, and the first factory equipped with Russian machinery was erected in 1934 at Kayseri in the heart of Anatolia. This factory employs about 1,500 workers and has 33,000 spindles and 1,080 looms. The second Turkish textile mill to be equipped with Soviet machinery is in the town of Nazilli, southeast of Smyrna. It is to be opened in 1937 and will specialize in making the finer grades of cloth. These factories use an increasing amount of home-grown cotton, the quality of which is being greatly improved by the American-directed Cotton Research Institute near Adana.

Cotton is not the only field of development in which Turkey has sought the coöperation of the U. S. S. R. A special sum of £T550,000 was set aside in the Turkish Five Year Plan of Industrialization for the training of technical experts in Russia. It may be assumed that when these specialists return to Turkey they will give preference to Russian machinery. The willingness of the Soviet Government to accommodate Turkey by accepting a semi-barter basis of payments for these contracts has been, of course, a prime factor in Russia's favor, in view of the extremely tight exchange restrictions which in recent years have strangled Turkey's foreign trade with other countries. The Soviet Government was quick to realize that the best means of increasing its share in Turkey's trade would be to offer her a better bargain than she could obtain elsewhere. On the occasion of General Ismet Pasha's visit to Moscow in May 1932, the Soviets offered Turkey a credit of $8,000,000 to purchase Russian agricultural and industrial machinery (an innovation in Soviet foreign trade technique, as the U. S. S. R. is usually the debtor in such transactions). The Turkish mission was also presented with 10 tractors, 5 tanks, 2 trucks and a motorbus.[iv] No interest was required on the loan, which is to be liquidated over a period of twenty years by Turkish produce. This is not bad business for the Turks, provided the Soviet machinery stands up better in Turkey than it has often done at home.

A note of extreme cordiality runs through all official Soviet references to Turkey, evidently as the result of deliberate policy. There have been moments of tension between the two governments, arising in many cases out of trade disputes between Turkish merchants and the Soviet trading organs. Turkey has never hesitated to air these disagreements, though they have always been glossed over in the Soviet press.

III. IRAN

Since the present Shah came to the throne in 1925, the idea of industrializing Iran on the basis of her own raw materials has gone steadily ahead. The rôle of Soviet Russia in the early industrial development of Iran has been quite different from that played by her in Turkey. Memories of Tsarist penetration are still very fresh in Teheran. Russia, Sovietized or not, remains for Iran the big bad bear across the Caspian exploiting to the utmost her dependence on the Russian market and waiting for the opportunity to seize one of her defenseless provinces. After many

trade disputes in recent years, it is perhaps an earnest of better days to come that she sent a commercial and economic mission to the U. S. S. R. in 1935. A new Soviet-Iranian treaty was signed in August of that year, in place of the former commercial treaty which had just expired. At the same time measures were taken for the organization of through rail connections between the two countries and negotiations were opened with the Soviet Trade Delegation concerning various industrial contracts.

The immediate trend of industrialization in Iran will eventually play havoc with the traditional currents of her trade with Russia. The principal Russian exports to Iran have always been cotton textiles, sugar, oil products and matches; yet these are the first goods which the latter is manufacturing by machinery. Furthermore, according to the terms of the new Anglo-Iranian oil concession, the sale of native oil products is being vigorously pushed in Mazanderan, Gilan, Azerbaijan and Khorasan, where formerly only Russian oil penetrated. As a result, imports of Soviet oil fell from 65,426 tons in 1932 to 32,801 tons in 1935. On the other hand, a new market for industrial equipment and automobiles is growing up in Iran. The Soviets have not yet secured much of it but their share is increasing. Imports from Russia now include manufactured iron and steel, sewing machines, scales, agricultural machinery of various kinds (excluding tractors), tin plates, iron bars, etc. Thus the value of Soviet technical exports to Iran, a new feature in this trade, increased from 376,000 rubles in 1933 (when the commercial deadlock between the two countries occurred) to 980,500 rubles in 1934. If rails are included, these exports amounted to 2,799,700 rubles in 1933 and 2,221,400 rubles in 1934.[v]

In the Caspian provinces nearest to Russia, machinery has been imported from England, Germany, Czechoslovakia and France for the silk, cotton, sugar, jute and tobacco factories now being established there. Steel for the local bridges has come all the way from Sweden. Only in the case of the rails for the Trans-Iranian railway has Russia's favorable geographical position been adequately capitalized. The Soviets are reported to have refused to supply the northern sector of the railway, where owing to the distance from the Gulf they were the most favored competitors, unless they got the contract for the entire line of 950 miles. Iran attaches great value to this line as a means of conveying the products of her northern provinces to other markets besides the Russian, though a sober analysis of the situation points to Russia as the only stable outlet for her surplus wool, rice and cotton, railway or no railway. On this account, it would seem as if in the future Iran will tend more and more to increase her purchases of Soviet machinery and industrial equipment in place of her diminishing imports of Russian oil products, cotton textiles, matches, etc. In fact, this is confirmed by the first fruits of the new agreement made with Russia in August 1935. Shortly after this convention had been signed, the contract for the large food combine to be established near Teheran was secured by the Soviet Exportstroi. This combine will contain a grain elevator, a flourmill with a capacity of 200 tons of flour per day, a mechanized bakery, a macaroni factory and an animal feed station. All the plans for this scheme are being prepared by the Soviet All-Union Food Machinery Works. At the same time Exportstroi secured other contracts for the erection of 20 grain elevators, 5 rice-cleaning and 2 wool-washing factories during the next two years. These enterprises will be planned, built and put into working order by Soviet engineers, and the equipment will be made entirely in Soviet factories. The agricultural implements generally used by Iranian peasants are extremely primitive. The Soviet Union has had unique experience in putting modern agricultural machinery into the hands of millions of scarcely literate peasants and teaching them to use it. This experience might be useful in Iran. At all events the Russians keenly desire to supply their southern neighbor with tractors, threshing machines, etc. The widespread familiarity of the people of northern Iran with the Russian language ought to facilitate technical coöperation in this field.

Nevertheless, fear of Soviet political propaganda is likely to jeopardize any such plan. Few places in the world have a more miserable, fever-ridden population than that which works the lush rice and cotton fields of northern Iran and which is now being drawn into the new factories along the Caspian Sea. These budding industries are essentially capitalistic ventures of the oldest school, where the social claims of labor are ignored. A spark from across the Soviet frontier might in time easily start trouble among the industrial proletariat which must soon evolve in Iran. As yet the factory workers are mostly peasants with one foot well planted on the land, and are much too backward to have any inkling of the revolutionary movement as such. But if the Soviets succeed during their second decade of power in raising the standards of living of their agricultural and industrial workers as efficiently as they eliminated the old régime during their first, such a change cannot fail to influence the status of the masses in the border provinces of Azerbaijan, Gilan and Mazanderan.

IV. AFGHANISTAN

It is a sign of the times in Central Asia that the big international oil companies have now installed gasoline stations in Afghanistan.[vi] It is also a tribute to the good work done on the main arterial roads by the Afghan Government. But Afghanistan still is essentially an agricultural and pastoral country, producing a surplus of cotton, wool, hides and valuable karakul skins, fashionably known as Persian lamb.[vii] Minerals have been located in a number of districts: iron in Afghan Turkistan, oil near Herat, copper and gold near Bamian. These deposits are now being worked only for local needs, but the Government has consulted foreign experts regarding them and seems to be planning to exploit them soon either on a concession basis or independently.

As early as 1924, the Soviet Government showed its economic interest in Afghanistan by dispatching a commercial mission, which remained there until 1927. Its chief results were a considerable improvement in Soviet-Afghan trade [viii] and an air convention for the operation of a line from Tashkent to Kabul.

The beginnings of industrialization in Afghanistan go back to 1885-1887, when an arsenal was established in Kabul by British engineers. This arsenal has meanwhile grown into the largest factory in the country, a heterogeneous state enterprise turning out firearms, military supplies, clothing, soap -- all under the same roof. In the neighborhood of Kabul, cement, matches and glass are also manufactured. Scattered throughout the country are a number of small power-driven plants. There are machine-repair shops attached to the arsenals at Herat, Masar-i-Sherif and Kandahar. Herat has a cotton-ginning mill, Masar-i-Sherif an oil press and soap factory, Kandahar an ice factory, and Jalalabad a small sawmill. The Government takes an active part in fostering and subsidizing these small industries. Foreign capitalists may participate in commerce and industry provided they submit to the same laws, taxation and legal procedure as Afghan citizens.

As a result of vigorous salesmanship, the quantity and variety of Soviet goods sold in Afghan bazars have very greatly increased since the war. Formerly, British India had a virtual monopoly of the southern Afghan trade and prewar imports from India were almost double those from Russia. Now British and Russian imports are nearly equal:

1914 1932
Afghan imports from India £1,300,000 £1,600,000
Afghan imports from Russia £ 700,000 £1,500,000

The Soviet Central Asian railway system touches the northern Afghan frontier at Kuskha and Termez, while several new roads traversing the mountainous regions have greatly assisted Soviet economic penetration into the southern parts of the country. The railhead of the British-Indian railways is at Peshawar, on the southern frontier of Afghanistan. King Amanullah's projects included an agreement with a French financial group (in which German capital participated) for a trans-Afghan railway. This plan was shelved when the King fell, leaving a broad gap between two hostile railway systems -- and a provoking challenge to international railroad firms seeking new worlds to conquer. When the time comes to build this railway, the Soviets will certainly be as keen competitors for the contracts as they now are in Iran.

V. SINKIANG

Though it is very doubtful if even one percent of the inhabitants of Sinkiang feel any need to alter their ancient habits, Soviet political economists long ago made up their minds that far-reaching changes are necessary there and that they are the people to make them. In fact, if change is to come, it is unlikely that it can come from any other quarter. China is too preoccupied to mother a province over a thousand miles from Peiping.[ix] The only other close neighbor is British India; but direct interference with the economic affairs of Sinkiang is not her business. Moreover, the mountain frontier would be, as in the past, an effectual barrier to large imports of British industrial equipment.[x]

During 1934 frontier markets were opened in Soviet Kazakstan for trade with merchants from Sinkiang.[xi] The traders bring to these markets various Sinkiang products, including wool, sheepskins and cattle, and exchange them for Soviet manufactures. There is, of course, nothing comparable to this on the Indian frontier. As a further lever to economic and political influence in Sinkiang, the Soviets have greatly improved the roads between it and their Central Asian territory. In 1930, for the first time, a regular Soviet motor truck service started running between Sergiopol, on the Turk-Sib Railway in central Kazakstan, and Chuguchak, whence the journey by road to Urumchi, the chief town in northern Sinkiang, takes about 48 hours. In the same year the Russians built a road up the Ili Pass leading from south central Kazakstan to central Sinkiang, and another along a higher pass further south leading directly to Kashgar. Branch lines of the Turk-Sib are also planned from Alma-Ata to Kuldja and from Sergiopol to Chuguchak, but how far they have progressed is not accurately known.[xii]

Soviet economic studies of Sinkiang emphasize the primitive character of its production of cotton, silk and wool, as well as its undoubted resources of oil. They therefore urge that Sinkiang be developed on the lines of the contiguous republics of Soviet Central Asia, where industrialization is now proceeding rapidly. According to the secret commercial agreement concluded (but never published) in October 1932 between the Soviet Government and the Governor of Sinkiang: (a) Soviet experts were to have the right to investigate the province's mineral and oil resources; (b) the Soviet Government promised to coöperate with Sinkiang in developing its natural resources. The Soviet cotton and wool-cleaning establishments at Kashgar, the first machine-run plants in the country, are a step towards this economic coöperation. Apart from any political aims, the Russians will have a fertile field for action in Sinkiang if they merely confine themselves to familiarizing the Turkis with modern agricultural machinery for preparing fruit, wool, cotton, silk, etc. Cotton ginning equipment is, in fact, now being supplied to Sinkiang as well as to Iran and Afghanistan by the Voroshilov Works in Tashkent.

VI. OUTER MONGOLIA

Since the day a revolutionary government was set up in Outer Mongolia by the Soviets, its frontiers have been difficult to penetrate. The few people who can claim to know anything at first hand about what is happening there assert that the "young Mongols" are strongly supporting the Moscow-inspired government, and that the army is entirely Mongolian.[xiii] It should be noted, however, that the Mutual Assistance Pact signed by the two countries in March 1936 materially alters the independent status of the new Mongolian Army because in case of attack the direction of operations may be entrusted to the Red Army staff. Some interesting information concerning the Mongolian Government and its aims was recently disclosed in the Mongolian Prime Minister's report to the Great Hural -- of which a Russian translation was published in the Moscow review, Tikhii Okean (Pacific Ocean).[xiv] According to this document the country is now "a national-revolutionary, anti-imperialistic, anti-feudal, bourgeois-democratic republic of a new type."

The report goes on to describe the industrial progress achieved in Outer Mongolia with the assistance of the U. S. S. R. "The chief progress in industry," it states, "was the construction (with the coöperation of the U. S. S. R.) of the industrial combine at Ulan-Bator and the steam wool-cleaning plant at Chat Chil. These enterprises, especially the industrial combine, lay the veritable foundation-stone of our national industry, so that raw materials and goods can be prepared and worked up at home." Practically the entire foreign trade of the country is with Soviet Russia, as the British, American and other commercial agents who used to deal in Mongolian wool, furs, hair, skins, etc., have long since been forced out. In the words of the Mongolian Prime Minister, "thanks to the Soviet Union, our country is supplied with the necessary goods. . . . We benefit greatly from this, as we are thus not exposed to capitalistic exploitation. Our exports to the U. S. S. R. have not corresponded to our imports. We ought to take steps to rectify this lack of balance by increasing our exports of cattle, raw materials, etc." The substitution in 1934 of the gold ruble for the commodity ruble may in itself automatically reduce the volume of Soviet exports which for several years poured over the frontier. The Russian trade statistics for 1935 show, in fact, a very considerable decline in this trade:[xv]

1934 1935
Soviet exports to Mongolia (in rubles) 44,410,000 11,633,000
Soviet imports from Mongolia (in rubles) 20,561,000 7,911,000

However enthusiastic certain sections of the "young Mongols" may be for the development of their country, it will not be even remotely possible to consider any far-reaching industrialization there for years to come. The country is adapted to the production of a limited number of manufactures based on its pastoral products, such as rough woolen cloth, shoes and boots, soap, sausages.[xvi] The geological resources of Mongolia are still shrouded in mystery and mining is in its infancy. Coal is worked at Nalaicha near Ulan-Bator. Gold is mined by the Mongolor Company. There are also valuable virgin forests in the region between the Selenga and the Orkhon Rivers which may eventually be a new source of wealth to the country in the form of lumber, pulp, and cellulose. When the Mongolians come to utilize their forests, they will have excellent technical advisers within easy reach in Siberia.

The Soviets have been in control of Mongolia since they engineered a revolution there in 1921. Their policy in that country, unlike their action in Soviet Central Asia, has shown considerable elasticity and intelligence. The manner in which they handled the situation arising from the 1930-31 revolts indicates that they do not intend to ride rough-shod over the Mongols as they have frequently done with dissenting Khirghizi and Turkomen inside the U. S. S. R. itself. Owen Lattimore, an acute observer of affairs in this part of the world, believes that under Soviet auspices Outer Mongolia can go far. "It may yet be," he says, "that we shall see a Mongolia in which the Mongols are restored to the control of their own destiny; in which the old nomadic collectivism has evolved into a new but still Mongol collectivism and in which the new economic forces of mines and industry, railways and machines will be manned, not by alien conquerors who have reduced the Mongols to an American-Indian degradation, but by free Mongols. It is this possibility which is today the one valid standard of reference for comparing the relations between the Soviet Union, the Mongols and China, or the Mongols and Japan." [xvii]

When the Soviets intervened in Outer Mongolia, Chinese sovereignty there was little more than a legal formula and in any case the Chinese were interested only in promoting their extortionate trade. Had Japanese domination been imposed, Mongolia's natural resources would undoubtedly have been developed and industrialization would have begun; but the Mongols would have been reduced to political ciphers in their own country, like the Koreans and Manchurians. All things considered, then, Lattimore's dream of a "liberally" collectivized Mongolian Mongolia is probably the best fate that could befall her, for at present there can be no question of her independence.

There also, of course, is an energetic process of industrialization under way in Russia's own backward Asiatic territories. The boldness and scope of Soviet plans in the republics of Central Asia recall the magician's wand of old. Tashkent, for instance, has become a cotton manufacturing center, while on the uninhabited shores of Lake Balkhash a huge copper combine is being built. In the enormous but sparsely inhabited territory of some 900,000 square miles that compose the Soviet Far Eastern Region, the severe climate, lack of men and equipment, and the dependence on outside food supplies, have hitherto checked the development of valuable natural resources. But despite the many difficulties industrialization is forging ahead.

This industrialization of Asiatic Russia has not, however, led to Soviet commercial expansion in the Pacific. Trade with China, Japan and the Dutch Indies is relatively insignificant. The efforts of Soviet Russia in the East are for the present being concentrated on the development of her fisheries, forests, mines and oil fields. These treasures form the basis of her future power on the Pacific -- and they were never more prized in the Orient than today.

[i] Oriente Moderno, April 1935, p. 170; May 1935, p. 221.

[ii] The Afghan Government has, for instance, entrusted the execution of its big irrigation schemes, the building of dikes, roads and bridges throughout the country, the instruction in the artillery school and the technical supervision of the arsenal, to Italian engineers and not to experts from nearby British India or Soviet Russia. Oriente Moderno, April 1935, p. 170.

[iii] Gerhart Bartsch: "Die Industrialisierung der Türkei," Geographische Wochenschrift, July 28, 1935, p. 665-672.

[iv] London Times, April 20, 1932.

[v] Economic Survey of the U. S. S. R., U. S. S. R. Chamber of Commerce, November-December 1935, p. 18.

[vi] G. F. Strickland: "The Economic Development of Afghanistan," The Contemporary Review, June 1933, p. 716-722.

[vii] Karakul skins represent in value half the total exports of Afghanistan. This trade is a semi-government monopoly. By virtue of an agreement signed in 1934 between the National Afghan Bank and Sov-Afghantorg, the former agreed to import 15,000 tons of Soviet sugar during 1934 and 1935, to be paid for in karakul skins. Cf. Oriente Moderno, May 1934, p. 231. Afghanistan has to thank the Soviets for this fortuitous source of wealth, since the Turkomen who owned the best flocks of karakul lambs fled to Afghanistan from Russian Turkistan after the outbreak of the Bolshevik Revolution.

[viii] For details of Soviet-Afghan trade see the author's "Soviet Economic Policy in the East." London: Oxford University Press, 1933.

[ix] With a view to improving communications between the capital and Sinkiang, the Chinese National Government in 1935 entrusted the famous Swedish explorer Sven Hedin with the task of mapping a motor road from Peiping to Kashgar. As a result of his investigations, all the data necessary to build such a highway are now available, though it is extremely problematic that such an expensive project will materialize.

[x] In spite of the natural limitations to this trade, it was evidently a matter of concern to H. B. M. Counsellor of Embassy, Sir Eric Teichmann, during his recent journey from Peiping to India via Kashgar. On this occasion the London Times remarked: "It is to be hoped that the British diplomatist's enterprising journey will bear fruit in the removal of the unnecessary and often illegal obstacles which are placed in the way of British-Indian trade by the local Chinese authorities while Russian traders have no such handicaps. The relative proximity of the Russian railroads in Central Asia to Kashgar and Urumchi would give advantages to Russian importers of the cheaper varieties of goods even if the political influence of Soviet Russia were less potent in Chinese Turkistan." Times Weekly Edition, January 16, 1936.

[xi] Economic Survey of the U. S. S. R., loc. cit., p. 45.

[xii] Walter Duranty: "Russia watches East as well as West," Asia, February 1936, p. 85.

[xiii] Owen Lattimore: "On the Wickedness of being Nomads," Asia, October 1935, p. 605.

[xiv] January-March 1935, p. 250-267.

[xv] Vneshniaia Torgovlia (Foreign trade statistics of the U. S. S. R.) for 1934-35.

[xvi] I. I. Serebrennikov: "A Soviet Satellite: Outer Mongolia Today," FOREIGN AFFAIRS, April 1931, p. 513.

[xvii] "On the Wickedness of being Nomads," loc. cit., p. 605.

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  • VIOLET CONOLLY, author of "Soviet Economic Policy in the East" and "Soviet Trade from the Pacific to the Levant"
  • More By Violet Conolly