Why does RUSSIA have to sell ALASKA to the UNITED STATES?
On October 18 1867 Alaska was formally transferred from Russia to the united states and, despite what some may think, the Americans didn’t steal or invade Alaska. The sale was on good terms and both sides had reason to do so. Russia sold Alaska for a total of 7.2 million dollars and considering that Alaska is the largest state in the united states and its current GDP is 50 billion dollars.
One would imagine that there is no great reason regarding reason why Russia sold such a huge domain. For so little money, so the questions are: why did russia sell Alaska? Why didn’t everyone in the united states agree to the purchase and why has Alaska been in a recession? In the last few years, Russia’s motives for selling Alaska ranged from financial and strategic to political.
First, it turns out that early Russian traders were attracted to Alaska by the walrus, ivory, and sea otter pelts that could be obtained by trading with the indigenous peoples of the region. This trade was carried out by a Russian-American company created by Russian businessmen.
The company controlled all the mines in Alaska, could make trade agreements with other countries independently, and had its flag, all these privileges were granted to the company by the Russian government, as it not only collected taxes but also owned a large part of its. The tsars and their relatives were among the shareholders.
However, by the 1990s, the sea otter population was almost extinct and, as a consequence, financial difficulties arose for the Russian company. It was on. Almost bankruptcy
could not continue without large subsidies and having the government take over the entire Alaskan colony would cost it a lot of resources, not only for that reason, russia was considering selling Alaska, but also because, after the Crimean war, where russia faced the united kingdom, France and Turkey, its finances, were badly damaged due to large military expenditures, so selling Alaska seemed like an increasingly reasonable option.
Secondly, Alaska was too vast and remote a place to be defended by russia. Russian leaders themselves recognized that they were not in a position to defend Alaska if their enemy of the time. The united kingdom attempted to attack, keep in mind that the eastern part of russia is inhospitable and unpopulated and that the distance between Saint Petersburg, the Russian capital at the time, and Alaska was several weeks by boat, so it couldn’t even defend its territory.
When foreign fishermen came to hunt in its waters because its navy was not strong enough to patrol all the waters of its remote Alaskan colony. And thirdly, russia and the united states were allies at the time both shared a certain rivalry with the united kingdom for russia. The sale of Alaska to the united states would weaken the power of the united kingdom on the pacific coast.
In other words, if the united states became the owner of Alaska, russia would thus avoid future aggression from British Oregon. This was one more reason to sell Alaska, so Edward de Stockel, Russia’s representative in Washington, started talks with the u.s secretary of state, William Seward. The two agreed on the treaty transferring Alaska, which months later, would be ratified by the u.s senate.
Russian leaders expected that sooner or later the united states would aim to dominate north America and take Alaska from them. From Russia’s point of view, the united states would continue to expand because it was in its manifest destiny, just as it had done with Texas, New Mexico, and other parts of the south.
Therefore, it was better to get some reward by selling Alaska and to be on good terms than to settle Alaska’s fate in the future in a less friendly way. This is not to say that the united states were the only one with expansionist ambitions.
Russia had acquired Latvia and Lithuania in 1795, Finland, in 1809, and a large part of Poland in 1815, and also wanted to conquer Bulgaria, Romania, Moldavia, and Crimea. So russia also wanted to continue conquering territories, but Alaska, as mentioned, was very difficult to protect now.
The other question is: why wasn’t everyone in the united states, in agreement with the acquisition of this territory, although reactions to the purchase, were mostly positive, as many saw that the possession of Alaska would serve as a base for expanding u.s trade with Asia?
Some detractors called the purchase Seward’s folly or Seward’s icebox, referring to the secretary of state, William Seward, who was most interested in the purchase. Critics claimed that the united states had acquired useless land and that the secretary of state’s intention was to gain popularity within his party and to improve the image of President Andrew Johnson, who was facing impeachment at the time for two decades.
After buying this territory, the united states didn’t pay much attention to Alaska. Almost all Russian settlers abandoned the place after the purchase, and thus it remained barely populated. It was only in 1896 when significant gold reserves were found that Alaska became important.
It was the gold rush that made Americans realize the economic potential of this previously ignored land, its strategic value increased even more during world war ii because of its proximity to japan and then during the cold war because of its proximity to the soviet union.
But it was not only because of gold and its location that had gained importance but also because of the discovery of other natural resources such as oil, silver, lead, and copper. Although it must be said that in recent decades, Alaska obtained much of its income on account of oil production, which peaked in the 1990s and since then hasn’t stopped decreasing,
in the graph, its potential reserves remain large, but attempts to drill for oil offshore in the arctic national wildlife refuge have been met with continued environmental opposition in 2020 Alaska had its lowest oil production in 40 years, partly because the pandemic caused oil prices to fall to historic lows and in this event, Alaska suffered more than any other producer, because its costs to extract the oil are so high, much of it is extracted in the northern part of the state and transported through a 1300, kilometer long pipeline and then shipped to the other west coast states.
For this reason, the oil sector in Alaska is very sensitive to prices because it has to exceed 60 a barrel to be profitable, since oil prices fell in 2014, Alaska has been in recession virtually every year. Likewise, since 2014 Alaska’s unemployment rate has been higher than the average u.s unemployment rate. Additionally, oil revenues typically account for a good portion of the public budget.
The state of Alaska runs a permanent deficit of over 1 billion a year, so oil no longer pays most of the state government’s bills. Alaska’s big advantage is that a law was created in 1976 that required at least 25 percent of oil production revenues to go into a permanent investment fund.
The fund grew slowly in its first two years, reaching 137 million dollars in 1979. Four decades later, that investment fund equals more than 70 billion dollars. That is much larger than Alaska’s 1 billion fiscal deficit. So it is the earnings from this investment fund that are paying the state’s bills.
There is no doubt that Alaska will face a transition from an oil-based economy to a more diversified one in the coming years. The good thing is that it invested the oil boom surpluses in the permanent fund, and that gives relief to public finances.
The bad thing is that, despite having a favorable tax climate for business and business-friendly laws, it will continue to face the problem of its territorial isolation and high transportation and utility costs. Still. It is hard to think that the united states have ever regretted buying Alaska for only 7.2 million dollars.