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The empire strikes back: the evolution of the Eastern bloc from a Soviet asset to a Soviet liability

Published online by Cambridge University Press:  22 May 2009

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The structure of the Soviet bloc would appear to be ideal for the maximization of Soviet domestic and foreign interests. The actual ledger of Soviet gains and losses from control over Eastern Europe, however, reveals a different picture. Over the postwar period Eastern European contributions to Soviet national security, economic growth, and domestic stability have declined. This decline in the value of empire to the Soviets is a function of three factors. The first is growing regime-society tensions in Eastern Europe as a result of East Europe's dependence on the Soviet Union and the derivative structures of its Stalinist political economies. The second is the Soviet role within the bloc as a political and economic monopoly and monopsony. And the third is the unexpected costs, both to the Soviet Union and to Eastern Europe, that attended the bloc's reunion in the early 1970s with a global capitalist system in crisis.

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Articles
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Copyright © The IO Foundation 1985

References

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33. In the face of hard-currency problems, two of the more “uppity” states in the region–Romania and Yugoslavia–turned more of their trade toward the Soviet Union. See Statisticki godisnjak Jugoslavije, 1981 (Belgrade: Central Statistical Office, 1981), p. 747Google Scholar, and Laux, Jeanne Kirk, “The Limits of Autonomy: Romania in the 1980s,” in U.S. Congress, Joint Economic Committee, Eastern European Economic Assessment, Part II (Washington, D.C., 1981), pp. 107–27.Google Scholar

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36. See the exhortations directed to the party and the workers to tighten discipline and produce more with less in the November 1982 and the June 1983 Central Committee Plena, which are summarized in “Peredovaya: na vazhneishikh uchastkakh nashei raboty,” Kommunist 50 (July 1983), pp. 313Google Scholar, and prefigured in “Luchshe rabotat'–luchshe zhit',” Kommunist 49 (April 1982), pp. 312Google Scholar. Recent figures on the growth of labor productivity, investment in productive versus unproductive investment, consumption as a percentage of GNP, and economic growth all show the effects of austerity. See Bagdasarov, A. and Pervushin, S., “Proizvoditel'nost truda: teorizya, praktika, rezervy rosta,” Kommunist 50 (01 1983), pp. 1423Google Scholar, and JEC, USSR: Measures of Economic Growth.Google Scholar

37. Consider the implications, for example, of the sharp growth in Soviet tourists visiting Eastern Europe, as noted by Bushnell, John, “The New Soviet Man Turns Pessimist,” in Cohen, Stephen et al., eds., The Soviet Union since Stalin (Bloomington: Indiana University Press, 1980), pp. 177–99Google Scholar. Consider as well the implications of higher levels of consumption among party members in consumer-deficit societies, as discussed by Matthews, Mervyn, Privilege in the Soviet Union (London: Allen & Unwin, 1978)Google Scholar, and the implications of polls citing resentment over inequalities in privilege cited in Paul, David and Simon, Maurice, “Poland Today and Czechoslovakia 1968,” Problems of Communism 30 (0910 1981), pp. 2539.Google Scholar

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45. See in particular Gitelman, Zvi, “Power and Authority in Eastern Europe,” in Johnson, , ed., Change in Communist Systems, pp. 235–64Google Scholar; Baumann, Zygmunt, “Twenty Years after: The Crisis in Soviet Type Systems,” Problems of Communism 20 (1112 1971), pp. 4553Google Scholar, Gitelman, , “World Economy”Google Scholar; Pravda, Alex, “East-West Interdependence and the Social Compact in Eastern Europe,” in Bornstein, et al., East-West RelationsGoogle Scholar; Triska, , “Workers' Assertiveness”Google Scholar; Bahro, , Alternative, p. 207Google Scholar; and Konrad, and Szelenyi, , Intellectuals on the Road.Google Scholar

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48. It was hoped, according to the arguments supporting the new stage of “Developed Socialism,” that greater equalization in income distribution by class during the 1960s would enhance productivity. See Bunce, , “Political Economy”Google Scholar; Connor, Walter, Socialism, Work, and Equality (New York: Columbia University Press, 1979)Google Scholar; and Mieczkowski, Bogdan, Personal and Social Consumption in Eastern Europe (New York: Praeger, 1977), pp. 149, 196–98, 225, 273, and 311Google Scholar. As Jozef Pajestka put it (quoted in Mieczkowski, p. 189), “a better satisfaction of human needs favors faster economic growth.”

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52. On the U.S. misconstrual see in particular Radway, Lawrence, “The Curse of Free Elections,” Foreign Policy no. 40 (Fall 1980), pp. 6173CrossRefGoogle Scholar; Bell, Coral, “Soviet American Strategic Balance, the Western Alliance, and East-West Relations,” in Bornstein, et al. , East-West Relations, pp. 1130.Google Scholar

53. Paul Marer, quoted in Lewis, Paul, “Role of Western Banks in Poland's Debt Crisis,” New York Times, 3 02 1982Google Scholar. For a Soviet view of these issues, see Bauman, L. and Grebnikov, B., “The Socialist Community: Economic Integration,” International Affairs (Moscow) 22 (1981), pp. 7381.Google Scholar

54. Quoted in Sampson, Anthony, “So, Give Credit Where Credit Is Due (Poland),” New York Times, 10 01 1982Google Scholar. See also Eichler, Gabriel, “Country Risk Analysis and Bank Lending to Eastern Europe,” in JEC, Eastern European Economic Assessment, 2:759–75Google Scholar; “The Country Risk League Table,” Euromoney, February 1982, p. 46Google Scholar; and Holzman, Franklyn, “Credit Worthiness and Balance-of-Payments Adjustment Mechanisms of Centrally Planned Economies,” in Rosefielde, Steven, ed., Economic Welfare and the Economics of Soviet Socialism (Cambridge: Cambridge University Press, 1981), pp. 163–84.CrossRefGoogle Scholar

55. For example, it has been estimated that such trade furnishes 1% of the West German GNP, provides 92,000 jobs to West Germany (particularly in steel), and, with the pipeline deal, will provide some 20,000 more jobs to the seven European nations involved. Finally, there is energy dependence. In the early 1980s, 17% of West German domestic gas consumption is provided by the Soviets, a figure expected to rise to 30% by the 1990s and to 20% for other Western European countries. See Stent, Angela, “The USSR and Germany,” Problems of Communism 30 (1110 1981), pp. 123Google Scholar; Tagliabuc, John, “Bonn Needs the Business Even More Than the Gas,” New York Times, 14 08 1981.Google Scholar

56. See Zoeter, Joan Parpart, “Eastern Europe: The Hard Currency Debt,” in JEC, Eastern Europe Economic Assessment, vol. 1 (1981), pp. 716–31.Google Scholar

57. By 1976–77, for example, Poland was borrowing for current consumption needs. See Lissakers, Karin, “The Polish Debt,” New York Times, 8 01 1982Google Scholar. For a discussion of the mechanics of the “debt regime,” see Lipson, Charles, “The International Organization of Third World Debt,” International Organization 34 (Autumn 1981), pp. 603–31CrossRefGoogle Scholar; Ortmeyer, , “Poland's Foreign Debt”Google Scholar; Portes, , “The Polish Crisis”Google Scholar; Zoeter, , “Eastern Europe”Google Scholar; and Brainard, Lawrence, “Eastern Europe's Uncertain Future: The Outlook for East-West Trade and Finance,” in JEC, Eastern European Economic Assessment, 1:751–58.Google Scholar

58. In 1979 Eastern Europe's current-account balance was negative $5 billion. In 1980 the figure was –4.8, and in 1981 –5.5. The Soviet Union, by contrast, ran considerable trade surpluses in the bloc and in the world. See United Nations, Economic Bulletin for Europe vol. 33 (New York, 1981), p. 116.Google Scholar

59. The linkage between external dependence and patterns of income inequality in Eastern Europe is examined in Bunce, “Neither Equality Nor Efficiency.” For interesting insights into this linkage from an Eastern European perspective, see Ferge, Zsuzsa, A Society in the Making: Hungarian Social and Societal Policy, 1945–1975 (White Plans, N.Y.: Sharpe, 1979), pp. 159–91.Google Scholar

60. For example, while Poland traditionally has been a net food exporter, by the late 1970s Poland was a net food importer. This change reflected sharp declines in livestock beginning in 1977 and sharp declines in crop production beginning in 1978. See Lewis, Paul, “Economic Revival Called Polish Aim,” New York Times, 15 12 1981Google Scholar. Hungary, by contrast, has become a net food exporter, in part because the Hungarians have instituted significant organizational reforms in the countryside and have capitalized on Western technology and cooperative agreements to maximize output. See Theift, Sheila, “Hungary Harvesting the Fruit of U.S. Farming Know-How,” Chicago Tribune, 24 06 1982Google Scholar; Lewis, Paul, “What Poland Lacks, Hungary Has Aplenty,” New York Times, 16 12 1981Google Scholar. Indeed, by 1979 only Czechoslovakia, Hungary, and Romania were net agricultural exporters.

61. See “Curtain Call,” Economist, 3 December 1983, p. 92Google Scholar; Binder, , “Czechs Are New Economic Casualties”Google Scholar; Neuberger, Egon, Portes, Richard, and Tyson, Laura D'Andrea, “The Impact of International Economic Disturbances on the Soviet Union and Eastern Europe: A Survey,” in JEC, Eastern Europe, vol. 2 (1981), pp. 128–47Google Scholar; articles by Cornelson, Doris, Hewett, Ed, and Levcik, Friedrich, in JEC, Eastern Europe, vol. 1 (1981)Google Scholar; Hare, Paul, “The Beginnings of Institutional Reform in Hungary,” Soviet Studies 35 (07 1983), pp. 313–30CrossRefGoogle Scholar. For a general description of austerity measures as an economic tool, see Crockett, Andrew, “Stabilization Policies in Developing Countries,” IMF Staff Papers 28 (03 1981), pp. 5479CrossRefGoogle Scholar. It must be noted that austerity measures in these countries differ from those imposed by the IMF on the Third World. First, these measures involve primarily a stabilization, not in most cases a decline in per capita income in the Eastern bloc. Second, the social wage is left intact, while pressures increase to work more for the same remuneration. In other words, austerity policy in these countries is not as austere as it has been elsewhere. This is because of Soviet aid, because of the ways in which fusion makes a tie between economic austerity and political protest highly likely, and, finally, because these countries, unlike the Third World periphery, are considerably less trade-dependent and much closer to an autarchic economic structure. All this explains, as well, why Eastern Europe could prune so much of the region's external debt—a reduction of $8 billion in 1982 and $6.6 billion in 1983—and could slash imports from the West by 16% in 1982. See “Curtain Call.”

62. For example, almost 90% of Soviet imports from West Germany–their largest trade partner in the West–are manufactured goods and high-technology items, most of which are unavailable in the East or of poorer quality. See Lewis, Flora, “Split among Allies Runs Deeper than Sanctions,” New York Times, 3 01 1982Google Scholar, and Rosefielde, Steven, “Comparative Advantage and the Evolving Pattern of Soviet International Commodity Specialization, 1950–1973,”Google Scholar in Rosefielde, , Economic Welfare, pp. 185222.Google Scholar

63. Indeed, the Soviets were in early 1982 denied a loan by the West Germans that would normally have been routine. At the same time, of course, the Soviets had several sources of strength in bargaining as well, albeit weak ones. One is the necessity of the banks admitting overexposure, another is the dearth of assets available in the West for seizure if bankruptcy were to occur.

64. See Lipson, , “International Organization.”Google Scholar

65. The one constraint on Western banks was the difficulty, in lieu of any formal role for the IMF (except in the Romanian case), of forging cooperation. In the Polish case, the banks involved–over 500, and many of them small–had difficulty organizing and admitting their exposure. See Ortmeyer, , “Poland's Foreign Debt.”Google Scholar

66. Pravda, Alex, “East-West Interdependence and the Social Compact in Eastern Europe,”Google Scholar in Bornstein, et al. , East-West Relations, p. 184.Google Scholar

67. “Now Russia Asks for Time to Pay,” Economist, 6 February 1982, p. 81.Google Scholar

68. See Farnsworth, Clyde, “Poles Ask Admittance to IMF,” New York Times, 11 11 1981Google Scholar, and Farnsworth, , “Washington Watch: IMF Team Visits Poland,” New York Times, 21 12 1981.Google Scholar

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