Ventspils’ role in the global economy – in the words of the poet Jānis Peters – “smoldered for a long time” before it emerged in its full glory. We could begin to approach it by choosing the 1880s as a conditional threshold. It was then that the struggle between several oligarchic clans for the Caspian Sea oil reserves of the Russian Empire began to intensify.
Russia, the periphery of capitalism
During the Tsarist era, the influence of British Jewish families and French banks in the Russian Empire, especially in St. Petersburg, was overwhelming. Western bankers found business support groups in the banking families of the imperial capital who had kinship ties with the aforementioned Western banks, and these served their own and Western business interests. The banking structures were old, and they saw the potential of the emerging oil business and formed business relationships with it.
A couple of oligarchic clans turned out to be more agile and were closer to the oil fields – first of all, the Nobel family. Thus, in the arteries of the Nobel Prize, Russian oil blood also flows. Similarly, important families from Britain in the 1880s-90s acquired significant preferences in oil fields, as well as actively operated in the St. Petersburg financial market, making a profit by influencing the share prices of Russian assets on the Paris and other stock exchanges.
On the other hand, the Americans found their way and arrived later and began a struggle to squeeze into these deposits and exploit the Caspian oil alongside the British, who had been successfully exploiting Russia’s riches for a long time and had been helping out for centuries. The English Muscovy Company had been operating in Russia since 1555 at the latest, performing both trade and diplomatic functions, and minting its own money in the then Muscovy.
Competition developed between the British and American oil business. British and American financial structures conquered the market and political space of the Soviet state in the 20th century. (We ignore the active activities of the Germans, French, and other countries here.) It was the rivalry between these two oligarch groups and their service structures for economic and political influence in Russia that, on the one hand, deeply shaped the features of the Russian/Soviet regime and the composition of the ruling personalities throughout the 20th century. On the other hand, it forced Soviet leaders to learn how to maneuver between the different interests of the British and Americans and, in some episodes, play them off against each other.
Before the First World War, the Russian oil sector was dominated by Royal Dutch Shell, Nobel, and the Russian Oil Company. After the war, these firms were joined by Americans. Russia had the features of a capitalist periphery, and the essence of a capitalist periphery is to supply raw materials to the metropolises. Foreign capital dominated in Russia – for example, in metallurgy 88%, in locomotive construction – 100%, in oil – 80%. In St. Petersburg, only one of the eight largest banks was Russian.
In the mid-1920s, Stalin leaned towards closer relations with the American ruling clans. Standard Oil acquired the right to buy out large deposits in Baku, which had previously belonged to British families. It is clear that the British broke off diplomatic relations with Moscow, and this happened in 1927. However, the Americans helped finance the first five-year plan of the Soviet state, namely the development of the economy. The American interest was to weaken their competitors in Europe, and in this effort Moscow was a useful tool both then and later, to this day.
Political decisions often have to be derived from the great influence of oil, which is visible when individual events are placed on the calendar axis. Thus, in 1927/28, Trotsky was expelled from the party and exiled to Central Asia. On February 12, 1929, Trotsky left the Soviet Union, or rather, was released, but already on February 28, the Soviet “Oil Syndicate” signed a three-year contract in London, which gave Soviet oil a market share in England and supplies to American and English companies. Royal Dutch Shell co-owner H. Deterding actively hindered the entry of Soviet oil products into the market, organized a boycott of Soviet oil, but still lost this time, and Soviet oil gained market share. Immediately after that, in March, a delegation of almost a hundred English companies arrived in Moscow, and naturally, British diplomatic relations with the Soviet Union were restored soon after in October.
Oil accounted for up to a fifth of Moscow’s foreign exchange earnings, and Stalin noted that whoever owned the oil would win the next war. The Soviet Union had become a participant in the international oil market, and at times its interests had to be taken into account.
In the early 1930s, a crisis began in the Soviet oil sector, there were many accidents, there was not enough investment. Moscow lost the German market shortly before Hitler came to power, from where it was ousted by the British, namely the same Royal Dutch Shell under the leadership of H. Deterding. The latter expanded cooperation with Hitler’s Germany.
Beneficiaries of the convergence path
At the end of Stalin’s rule, a slow path began towards what would be called convergence 15-20 years later.
In April, a conference was held in Moscow, known in history as the Moscow Economic Meeting, which brought together hundreds of participants from 47 countries. It was partly the USSR’s response to the Marshall Plan and the creation of the European Coal and Coal Community. The conference did not produce any grandiose results, but there was some struggle over its content within the leadership of the Soviet Communist Party – the theses contained in the semantics of convergence were removed from the proposed texts as a result of careful censorship. It was important that it was the first attempt to open the “iron curtain”, to turn the logic of international relations onto the path of “peaceful coexistence”. The ideas of the conference did not disappear, they flourished later and became the basis of the country’s foreign policy during the Khrushchev era.
A “narrative” was created for specific Soviet target groups that the so-called socialist and capitalist worlds should begin to converge, and in part even merge. This applied only to those elite groups that directly encountered each other in trade transactions. This “convergence” allowed the leading American clans to earn more and, as a result of trade, to pour currency into the accounts of representatives of the Soviet government. This process had to be led, and it was done by officials with special mandates – from both sides.
After Stalin’s death, not only the visible government changed, but also the less visible part of the elite, which historians describe as “couriers”, “liaison officers” (in jargon – “interlocutors”), and who were used by governments before and after to coordinate their actions with the West. Khrushchev retained only a small number of inherited individuals, namely those who had special trust ties with the Western delegates for contacts with the leaders of the Soviet power.
Khrushchev intensively changed the leadership in Moscow soon after visiting London – his first foreign visit. American and British recommendations were taken into account in the selection of individuals.
This stage introduced an era of intensive British-Soviet cooperation in the 1960s and 1970s, the existence of which was known only to a very small part of the Soviet and British elites.
The history of mutual hatred, confrontation, but also fragmentary cooperation between the Russians and the British is centuries old, in which the British, as a result of brilliantly planned special operations, have usually been naturally successful. The Russians also have their own history of operations in England.
Mutually beneficial cooperation between Soviet and British financial structures is associated, for example, with the episode known in the financial history of Western Europe as the history of the “Eurodollars” in the late 1950s. The actions of the Soviet financial institution provided some assistance to the British financial center in its competitive struggle with New York, namely, the “People’s Bank of Moscow” was involved in the creation of the Eurodollar. This bank was established in London in 1919, and its subsidiary “Transit Bank” was located in Riga in the building of today’s Ministry of Education and Science.
On the British side, cooperation with representatives of the Soviet elite was curated by both services and individuals from the highest echelons, while on the Soviet side, respectively, by individual leaders of both the party and security services, using the Chamber of Commerce of Industry as a cover. The term “Firma” meant something specific in this context at that time, it was an instrument of economic cooperation on the Soviet side. Soviet cooperation with Great Britain suffered greatly after Lord Mountbatten himself was killed under strange circumstances.
A numerically small stratum of people emerged within the Soviet elite with access to ever-increasing foreign exchange flows generated from oil and, increasingly, grain and gas exports. Accordingly, the desire to live like in the West grew.
In the late 1960s, the Americans again intensified their influence on Moscow, at the highest level.
Rockefeller himself came to Moscow at the turn of the 1960s and 1970s, met with the leadership of the USSR and coordinated economic cooperation in several areas: traditionally in the field of oil exports, grain exports and also in the fields of financial services. In the field of the arms market, agreements were objectively more difficult to achieve, even later, because there was a competitive rather than a coordinating international market division position. Both sides were able, for example, to successfully trade weapons during the Vietnam War, coordinating who supplied them to which warring party.
In his footsteps, President Nixon visited Moscow in May 1972, and the Soviet leader visited the United States the following year. As a result, the Chase Manhattan Bank was opened in Moscow, including to service the growing cash flows from grain and oil trade. In the late 1970s, a number of Western banks entered the Soviet Union. The fact that Moscow allowed Solzhenitsyn to emigrate to the West in the early 1970s should be seen in this light, as it was a symbolic act to seal Moscow’s new course. The course that the Russians later called “entry into Europe,” the implementation of which was a priority for some Chekists and the Communist Party since the late 1970s and which is now a thing of the past.
Moscow was placed on the oil, gas, grain export and trade needle and did so willingly, happy for the opportunities to manage foreign exchange revenue flows.
In the early 1970s, the relevant clans under the leadership of the Soviet state discussed the geography of building gas export pipelines to the West, Germany first of all. Representatives of the Russian group offered to simultaneously build both processing facilities and pipelines for export. The Belarusians defended a rational offer, namely three pipeline directions, through Belarus, Ukraine, Moldova, however, the Ukrainian clan pushed out the Ukrainian pipeline as the most important. The export of raw materials gave quick easy foreign exchange income.
The Ukrainian clan in the Soviet elite was extremely influential, with whose influence only the Russian clan could compete. Other clans – Armenian, Georgian, Jewish, Muslim were significantly weaker, but the Latvian clan was practically destroyed by the end of the 1930s. In 1965, the Ukrainian clan even tried to obtain the right to sell grain on world markets “directly”, bypassing the center of Moscow. In the second half of the 1960s, in the leadership of the Communist Party, in the Politburo, Russians and Ukrainians had a numerical balance, in turn, two of the three most important positions in the country were held by Ukrainians.
Between 1955 and 1991, the Soviet government had seven Ministers of Agriculture, six of whom were Ukrainians. Ukraine was and remains a grain powerhouse, and for that reason alone it is of strategic importance to American business groups that control the international trade and price of grain.
Russia’s (non)entry into Europe
The beginning of the 1970s was a kind of turning point.
Finding an understanding with Soviet exporters was not difficult, because in the great Soviet state a special caste had arisen and was growing in power, namely those officials who were involved in and around the money flows generated by oil exports. Moreover, large foreign exchange earnings from gas exports to West Germany soon appeared. In the late 1970s, the question of whether to promote the unification of the two Germanys was discussed in the Soviet cabinets, and the opinion was positive. Later, M. Gorbachev, accordingly, with a light hand agreed to the unification of the two Germanys and ignored even the desperate requests of the British not to do so.
Economic cooperation, convergence with the West took place primarily under the sensitive and selfish leadership of the services and the Communist Party. The same services and political curators “played” against it from the West. But not only that – the third contour of power, organized crime, also had to be involved. In the 1970s, Soviet crime was reformatted. The first congress of so-called thieves in law in the Soviet state took place in 1979 in the south, in Kislovodsk, where, first of all, there is a warm climate, but mainly because it was close to the geographical homelands of the most powerful organized crime clans, the Armenians and Georgians. The “congress” supported the promotion of its people into power structures, while simultaneously improving business ties with Western structures. Thus, organized crime also promoted the Westernization of the Soviet state. The characteristics of Russia as a capitalist periphery in the 1990s were complemented by a pronounced character of organized crime.
In the early 1970s, the American gold standard of money collapsed. A new era in international trade and American hegemony began. The dollar was no longer backed by gold, it began to be backed by oil. All oil trade transactions must henceforth be conducted in dollars. The larger the amounts in oil trade contracts, the more dollars are needed and the more dollar printing machines can be loaded, the better for the owners of the money. Since the dollar was one of the cornerstones of American hegemony, caring about the price of oil was a national security task. As is known, in 1973 there was a Jewish-Arab war. After it, oil prices increased fourfold, thereby increasing the demand for dollars. Moscow was also a significant beneficiary. The coincidence in terms of calendar is that on the eve of this war, the aforementioned coordination of American and Soviet interests took place, both at the oil business and official levels.
The decisions regarding Ventspils fit into this flow of events. The American Occidental Petroleum Corporation, under the leadership of Armand Hammer, concluded several contracts with the Soviet government in April 1973. Among them were two contracts for the design and construction of special port facilities in Odessa on the Black Sea and Ventspils on the Baltic Sea to ensure the storage and transshipment of chemicals. Their value was 100 million US dollars. These deals had been discussed by the leaders of both countries. At that time, A. Hammer recognized that the deal was in the national interests of America, as it would help America’s balance of payments and ensure employment.
Victory for Ukraine and the West
“What’s happening in Ukraine is a secret war with secret rules,” a senior Biden administration intelligence official told Newsweek (July 5, 2023). The official argues that Washington and Moscow have decades of experience in crafting these secret rules, which require the intelligence community to play a central role: as the chief spy and negotiator, as the custodian of intelligence and a networker of relationships within the NATO alliance, and perhaps most importantly, as the agency trying to ensure that the war doesn’t spiral further out of control. Although Russia invaded, both countries were able to agree on terms. The United States would not engage in direct combat, Russia would limit itself to attacking Ukraine and would operate within well-understood covert operational guidelines.
On the one hand, there is no reason not to believe the authors of the investigative journalism of a reputable US media. On the other hand, even if there is some truth in these opinions of American officials, it could be said that they concern a fragment. Looking more broadly, the conclusion is that since the bloody invasion of Ukraine by the Putin regime and the criminal occupation of its territory, Western policy decisions to isolate Russia from the civilized world have become even more persistent. In turn, Western assistance to Ukraine to resist Russia is long-standing and extensive, it is constantly transformed depending on tactical tasks on the anti-Russian battlefield, but as a strategic slogan, the commitment to provide assistance “for as long as necessary” is maintained. Ukraine’s accession to the European Union could be part of Ukraine’s victory. Pushing Russia out of Europe is another. These and other victories will have their winners.