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New International, August 1948

 

Valentin Toma

Rumania: The ‘Russification’ of Economy

 

From The New International, Vol. XIV No. 6, August 1948, pp. 182–184.
Transcribed & marked up by Einde O’Callaghan for ETOL.

 

Meeting on June 11 in extraordinary session, the Rumanian Grand National Assembly “requested the government to proceed with the briefest possible delay to the general nationalization of all industries – mines, banks, insurance companies and transportation companies.” The next day it was whispered around that this “historic” session had taken place behind locked doors. It is certainly true that it lasted only two hours – in other words, just long enough to take a vote on the decisions published. They do not waste any time in the young Rumanian “popular republic,” all the more so since the stakes were quite substantial.

These nationalizations strike a blow at all the enterprises in which Western capital was invested. For example: the Romano-Americano oil companies (Standard Oil of New Jersey), Socony-Vacuum (Standard Oil of New York), the telephone corporation, which is an affiliate of International Telephone and Telegraph, New York. England will lose the branch of Royal Dutch Shell, Astra Romana, and the branch of the Anglo-Iranian company Steana Romana. Columbia, which worked with French capital, and the Rumanian-Belgian Oil Company, which used Belgian capital, are already down on the list of enterprises which are scheduled to be nationalized.
 

Rumania’s Black Gold

Situated as it is at the geographic crossroads on the still fluid frontier which separates Eastern Europe from Western Europe, Rumania and its people have perforce lived through an exceedingly racking national history. Its short period of existence as an independent state was preceded by long centuries marked by barbarian invasions and Turkish rule.

The discovery of its oil resources brought about a mad race for the black gold. Like clouds of locusts, a swarm of adventurers, disguised as businessmen, rushed to grab the lands.

The Germans have always boasted that it was they who inaugurated the race for Rumanian oil. But at the beginning of the twentieth century there took place a fierce struggle between rival foreign capitalist companies to seize this richest of Rumanian resources. English, Dutch, French, Americans, Belgians, Germans, Italians and Swiss – all participated equally in this silent war.

The First World War, which resulted in the independence of all the territories inhabited by Rumanians, was only one of the phases of this struggle for the oil. Defeated in the first round, France’s Rumanian ally was forced to sign an armistice with the kaiser’s Germany. Then the fortunes of war changed, and Rumania found itself among the victor nations. It was then that its oil became an integral part of the heritage of Allied capital.

Also entering the picture was the revolt of Rumanian national capital, represented by the liberal party of Bratianu. These elements, launching the slogan “By ourselves!,” in reality were merely asking for a larger share of the profits to be gained from exploiting this wealth. The constitution and mine law of June, 1924, which made the subsoil resources the property of the national state, signalized their laudable effort to transfer a share of the oil industry into the hands of native capitalism.

This raid on the entrenched power of foreign big capital was camouflaged under an aura of patriotism thrown up by the liberal theoreticians of the Bratianu regime. If this so-called “nationalization of capital” – foreign capital – garnered nothing for the nation as such, it did ensure imposing profits for the liberal group around the old kingdom; meanwhile the debts contracted by the state mounted daily. But the Western creditors never again saw the color of their money.

Pursuing its policy of economically enslaving the countries of Eastern Europe, Hitler Germany paid special attention to Rumania’s oil and grain. Oil production was boosted by every available means. The war and the regime of Antonesco, the real Rumanian quisling, assured the Germans a complete economic monopoly. And it is well known that Rumanian oil played a far from negligible role in supporting the Nazis’ war machine. Between 1940 and 1944 the Prahova valley annually furnished the Wehrmacht with an average of five and a half million barrels of this precious strategic material.
 

Russians Move In

After the Russian army chased out the Nazis, the Antonesco regime was replaced by a series of governments which were obliged to bend to the needs of the conqueror. The Russians took possession of the Germans’ property as spoils of war. That is, they inherited what the latter had stolen – entirely at the expense of the victims.

The Russians were not at all modest in their demands. The Rumanian oil industry was subjected to fierce exploitation to make up for Russia’s deficiencies. Rumanian oil was utilized to the limit to ensure agricultural and industrial development and mechanization. In statistics published several months ago on the distribution of foreign capital in the Rumanian oil industry, we read:

Rumanian

....................

27.35%

British

....................

22.08

Russian

....................

12.53

American

....................

12.30

French

....................

10.65

Others

....................

15.09

In reality, however, these figures are meaningless, since the truth is quite different. Oil production has been put almost wholly at the disposal of Russia alone. Foreign capital has suffered heavy losses, since all the drilling equipment which legally belonged to it was declared to be spoils of war, and the Russians transported it out of the country without due process or any other procedure.

Rumanian oil is paying for Russia’s war expenditures, while Rumanian industry is forced to use gas. Oil used to be at the top of the list of fuels most widely used in the country (40 per cent as against 25 per cent for gas and 25 for coal) but now it has gone down to the bottom of the list. Now together with wood – it is the material which figures most largely in Russian export.

Indeed, in order to free bigger quantities of oil for export, vast plans have been elaborated for electrification. Drilling has been stepped up. It now stands at 200,000 meters more than the minimum necessary to keep production at a constant level (319,000 meters in 1948 as against 163,000 in 1947 and 288,000 in 1938).

With the aid and on the proposal of the Russians, drilling is now being pushed to depths previously unknown in Rumania. Exploitation of new areas in Moldavia, Transylvania and Banat is under way. The export of petroleum products to Russia is being raised to its maximum.

Outside of the regular exports registered as such in the statistical figures, there is still another sector which is much more important and which is not controllable. In 1947 – a year marked by a serious fall in production – 1,976,000 barrels left the country by the sea route. The official statistics show that in 1946, out of the 2,255,000 barrels of petroleum products exports, only 95,000 went to countries outside of the Russian sphere. This is the result of the Russo-Rumanian agreement of May 8, 1945 – extended and broadened in 1947 – which ensured the Russian monopoly over Rumania’s economy, its wealth and its principal industries.

The nationalization recently decreed legalizes the existing state of affairs. Except for the mixed Russian-Rumanian companies, all the other oil companies have long been subjected to strict production controls – restrictions on exports and restrictions on the import of materials necessary for maintaining the level of production. The process of squeezing out the old owners began with the imposition of heavy obligations by administrative decrees, changes in technical personnel requited by governmental order, by and finally the confiscation of the two main companies belonging to Royal Dutch Shell.

Who will profit from the recent nationalizations? The answer is very easy. Finance Minister Vasile Luca, on returning from Moscow after signing a new treaty with Russia, frankly declared: on the basis of the 1945 agreement which provided for the formation of Russian-Rumanian companies, new industries are going to be built up. The new agreement provides for the collaboration of Russian technicians and the formation of mixed commissions with discretionary powers in their respective branches of industry. This monopoly, combined with its monopoly over the import and export of all material needed for: production, ensures Russia complete domination over Rumania’s oil and over its entire economy.

The specialists of the new Rumanian Stalinist juridical school have found the necessary formula to legalize the Russian seizure of all of Rumania’s wealth. The draft of the law presented to the National Assembly provides that state-owned capital of a country belonging to the UN will not be nationalized. But the only foreign state which has its own capital (not private capital) invested in Rumania is Russia.

Russia now enjoys a monopoly over oil and over sea and air transportation; a considerable share of control over the automobile road network; quasi-monopolistic control over the exploitation of lumber and iron resources, mines and metal-working; a large share of control over the banks, insurance and textiles.

A few figures will be enough to give an idea: the Reshitza works, which are today 30 per cent Russian-controlled, represent almost half of the Rumanian metal-working industry; and 65 per cent of the coal plants of the Jin valley, main section of this industry, are in the hands of the Russian state, which has now become the sole heir of the former Hungarian capitalists. And these are only two examples.

War on foreign capital? Yes, this has indeed been waged. But not for the benefit of the Rumanian people: it has been waged for the interests of the Russian state. That is the truth about the “nationalization” of economy in Rumania.

 
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