Why Did Russia Sell Alaska to the U.S.? How the $7.2 Million Deal Gave America Oil, Power, and a Geopolitical Edge

Once dismissed as a frozen wasteland, Alaska became one of America’s most strategic assets—rich in natural resources, military value, and global influence after its 1867 purchase from the Russian Empire.

The sale of Alaska from Russia to the United States in 1867 was not a spontaneous decision but rather the culmination of a series of geopolitical and economic calculations that stretched back more than a century. The roots of Russian involvement in Alaska go back to 1725, when Russian Tsar Peter the Great dispatched Danish navigator Vitus Bering to explore the region's eastern frontiers. His expedition sparked growing Russian interest in Alaska, a territory known for its abundant natural resources, particularly lucrative sea otter pelts, and its sparse Indigenous population.

In 1799, Emperor Paul I of Russia granted a charter to the Russian-American Company, a state-sponsored monopoly that controlled trade and governance in Alaska. This company was responsible for establishing early settlements such as Sitka, which became the colonial capital after Russia forcibly subdued the native Tlingit tribe in 1804. However, despite these early colonial efforts, Russia soon encountered significant challenges in maintaining control over Alaska. These included the vast distance from St. Petersburg, harsh Arctic climates, supply shortages, and growing pressure from American traders and explorers moving westward.

The Crimean War and Russia’s Reassessment

Russia’s decision to sell Alaska was heavily influenced by the outcome of the Crimean War (1853–1856), a conflict sparked when Russia invaded the Turkish Danubian principalities of Moldavia and Wallachia (present-day Romania).

Fearing that Russian expansion would threaten trade and stability in the Mediterranean, Britain and France allied with the declining Ottoman Empire to halt Russian advances. The war culminated in a humiliating defeat for Russia, especially in the Crimean Peninsula, where British and French forces bombarded key Russian positions.

According to the Advocate for Peace, a journal of the time, Russia spent the equivalent of 160 million pounds sterling on the war. Following this costly loss, Russia began to reassess its colonial ambitions, especially in far-flung, hard-to-defend regions like Alaska. By the mid-1800s, overhunting had drastically reduced the economic value of Alaska's fur trade, while its proximity to British-controlled Canada posed a strategic liability in any potential future conflict with Britain. Consequently, Tsar Alexander II concluded that selling Alaska could help raise desperately needed funds and prevent Britain from seizing it.

The Alaska Purchase

Following the end of the American Civil War in 1865, U.S. Secretary of State William Seward revived discussions with Russia, which had long expressed interest in selling Alaska. On March 30, 1867, the U.S. officially agreed to purchase Alaska for $7.2 million. This equated to less than two cents per acre, granting the U.S. nearly 1.5 million square kilometers (about 600,000 square miles) of territory and a crucial foothold on the Pacific northern rim.

Despite the scale of the acquisition, the deal was met with widespread skepticism in the U.S. Critics derided the territory as a barren wasteland, dubbing it “Seward’s Folly” or “Seward’s Icebox”. One skeptical editorial from the New York Daily Tribune in April 1867 declared:

“We simply obtain by the treaty the nominal possession of impassable deserts of snow, vast tracts of dwarf timbers… we get… Sitka and the Prince of Wales Islands. All the rest is waste territory.”

However, the discovery of gold in the Klondike region in 1896 changed public opinion, revealing Alaska's economic potential. From that point on, Alaska transitioned from a ridiculed purchase into a strategic and resource-rich asset for the United States.

Alaska’s Path to Statehood and Economic Transformation

Alaska’s economy began to diversify in the early 20th century. Beyond gold, commercial fishing, particularly for salmon and halibut, became a major industry. The Kennecott copper mines also experienced a boom. During World War II, the U.S. built major military bases in Alaska, which significantly improved infrastructure and spurred population growth.

But the most transformative moment came in 1968, with the discovery of vast oil reserves at Prudhoe Bay on the Arctic coast. This discovery made oil revenues the backbone of the Alaskan economy. These revenues funded public services and established the Alaska Permanent Fund, a sovereign wealth fund that invests in stocks, real estate, and other assets. The Permanent Fund Dividend (PFD), which pays out annual dividends to residents, ensures that Alaska’s oil wealth continues to benefit citizens long after the oil is gone. As a result, Alaska remains one of the few U.S. states with no state income or sales tax.

In addition to oil, tourism has emerged as a key economic sector in recent decades. Visitors are drawn to Alaska’s pristine national parks, glaciers, and Arctic wilderness. This mix of natural resource extraction, fishing, and tourism has made Alaska a vital, self-sustaining part of the United States.

Alaska Today: Strategic Relevance and International Attention

Alaska's strategic military importance has also grown. One such key facility is Joint Base Elmendorf-Richardson, a 64,000-acre military installation near Anchorage. It plays a central role in U.S. Arctic defense operations and readiness.

On August 15, 2025, this base will host a high-profile summit between U.S. President Donald Trump and Russian President Vladimir Putin – marking the first-ever visit by a Russian head of state to Anchorage.

This location carries symbolic weight, considering Alaska’s proximity to Russia – only 90 km (55 miles) apart at the Bering Strait – and the historical shift from Russian colony to U.S. statehood. More than 150 years after the Alaska Purchase, the region that was once dismissed as a "waste territory" now stands as a critical economic, strategic, and diplomatic asset for the United States.

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