The Chargé in the Soviet Union (Grummon) to the Secretary of State

No. 2312

Sir: In view of the belief which appears to be more or less generally accepted abroad that the Soviet Union possesses at the present time commercial resources covering a large number of essential raw materials with which a certain power or group of powers could be supplied in the event that the Soviet Union considered it advisable to furnish them, I have the honor to transmit herewith a memorandum49 setting forth data regarding the self-sufficiency and export capacity of the Soviet Union in respect of twenty-five strategic raw materials, as well as observations relating thereto.

In order to avoid speculation as far as possible the Embassy has not entered into the question as to whether the Soviet Union could furnish a base for these materials if it were invaded and part of its territory were to be exploited by a foreign power. The memorandum consists for the most part of a discussion of the productive and export capacity, as well as import requirements of the Soviet Union as an independent country planning its national economy on the basis of the third five-year plan. The importance of this program in respect of the present and future internal requirements and export capacity of the country should be taken into consideration since, as pointed out in the Embassy’s despatch number 2300 of May 4, 1939,49 it provides for not only much larger consumption but also for far greater stockpiling of raw materials than during the second five-year plan.

The memorandum reveals in substance that the twenty-five raw materials under discussion may be divided as follows, into three main groups:

1. Raw materials the commercial resources and production of which are so extensive as to enable regular exportation in large quantities. This group is restricted to: (a) manganese ore; (b) magnesite; (c) potash; (d) apatite; (e) phosphate rock; (f) asbestos.

2. Essential raw materials the commercial resources and production of which are such that although self-sufficiency is attained or nearly achieved, exports in large quantities would not be possible without serious injury to the national economy. This group includes: (a) iron ore; (b) chromite; (c) sulphur; (d) mercury; (e) mica; (f) zinc; (g) coal; (h) cotton; (i) petroleum.

With respect to coal, cotton, and petroleum, it should be noted that although they are now produced in quantities which are barely sufficient [Page 763]to satisfy internal requirements, nevertheless the Soviet Union exports them to a small extent. In the case of coal and petroleum, this factor may be explained in great part at least by the fact that the Soviet Union several years ago concluded contracts providing for deliveries abroad which it apparently feels it necessary or advisable to endeavor to” fulfill. In this connection it should be borne in mind that other considerations than the internal requirements of the country have on occasion prevailed in the Soviet Union, the latest confirmation of which is to be found in the declaration of the People’s Commissar for Foreign Trade, Mikoyan, at the XVIIIth Party Congress on March 15, 1939, to the effect that Soviet trade “depends directly upon political relations” with other countries. Consequently, exports are sometimes effected regardless of internal requirements. In the case of cotton, however, exports are possible largely because existing Soviet textile facilities are not able thus far to utilize the inferior grades of which the Soviet cotton crop to a considerable extent is composed. Therefore it may be anticipated that if the Soviet authorities succeed, in accordance with present plans, in installing better processing facilities exports of cotton will decline.

3. The essential raw materials which the Soviet Union is obliged to obtain either entirely or in considerable part from foreign sources are the following: (a) copper; (b) lead; (c) nickel; (d) tin; (e) tungsten; (f) molybdenum; (g) antimony; (h) genuine rubber; (i) wool; (j) aluminum.

On the basis of the foregoing, it may be estimated that in respect of the twenty-five essential raw materials enumerated above the Soviet Union is self-sufficient in nine and may export readily six, but is dependent upon foreign sources for obtaining ten. The ten raw materials of which there is a deficiency in the Soviet Union, however, possess such great strategic importance than any failure to obtain them as a result of a war of long duration would undoubtedly lead to disaster. It seems probable, therefore, that although the Soviet Union may not be as vulnerable as Germany, for example, in respect of the deficiency of essential raw materials, nevertheless it is far from holding the position of self-sufficiency enjoyed by the United States and the British Empire.

With respect to the question of the raw materials which Germany might obtain from the Soviet Union, it is likely that with the exception of manganese none of the materials of which there is a deficiency in Germany could be purchased in appreciable quantities. If petroleum, iron, copper, tin, aluminum ore, the ferro-alloys, and sulphur may be considered the essential raw materials which Germany is least readily able to obtain, there is reason for believing that unless Germany could succeed in bringing about a radical modification by the [Page 764]Soviet Government of the latter’s third five-year plan, which is extremely unlikely without resort to war, only one of these deficiencies, namely, that of manganese, could be overcome by purchasing supplies from the Soviet Union.

Respectfully yours,

Stuart E. Grummon
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