2 Economic problems in the Communist bloc brought about the end of the Cold War. Discuss

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Term 3 2009
By Charmaine Chan 10A01B
2 Economic problems in the Communist bloc brought about the end of the Cold War. Discuss.
The end of the Cold War was characterised by a fundamental change in East-West relations and the collapse of the Iron Curtain by Eastern Europeans. To what extent did economic problems contribute either to the new relationship or to the Eastern European revolutions? This essay argues that economic problems brought about the end of the Cold War to the extent that they provided the domestic imperative for Gorbachev’s reforms, which set the stage for the end of the Cold War by improving East-West relations and precluding a clamp-down on Eastern European nationalist movements. Economic problems, however, do not fully explain the causes and implications of these reforms: factors independent of economic problems such as ‘new thinking’ and the personality of Mikhail Gorbachev are equally important and need also to be discussed. Furthermore, economic problems fuelled the Eastern European uprisings, but were neither the most significant nor the only contributing force. Therefore, economic problems played an indirect role in concluding the War.
The Soviet Union undoubtedly had serious economic problems towards the end of the Cold War. Growth rates of 0%, low productivity and decaying social infrastructure were but some symptoms of declining economic performance. Gorbachev recognised that without some kind of democratic renewal or economic transformation the Union would not be able to remain internationally competitive (Painter). Economic problems also had political implications: steadily falling rates of economic growth did serious damage to the USSR’s international standing, and plummeting standards of living severely tested the ‘social contract’ between society and regime, with the latter facing increasing cynicism and opposition. Gorbachev saw that “only an intensive, highly developed economy [could] safeguard a reinforcement of [the] country’s position on the international stage and allow her to enter the new millennium with dignity as a great superpower”. It can then be said that the presence of terminal economic problems, along with their political repercussions, provided the rationale and gave cause for Gorbachev to embark on his reformist agenda both domestically and internationally.
The reforms that economic problems prompted Gorbachev to undertake required a relaxation of tensions with the US. There are two main reasons. Firstly, to finance perestroika or economic restructuring, it was necessary to divert resources from the military to economic and social programmes (Petersen). The Cold War was a colossal burden on the Soviet economy: approximately US$107b was spent on arms in 1980, with defence spending varying within the range of 14-16% of GNP from 1960-90. The USSR was the only industrialised state in the world that for so long spent so much of its national wealth on armaments and military forces (Ikle). Outside, subsidies given to the Eastern European bloc and costs involved in sustaining unpopular regimes also put considerable drain on the Soviet economy (military regime of General Jaruzelski in Poland was subsidised to $2b roubles), as did the provision of aid to Third World players that the Soviet Union supported, such as Cuba (US$4b per annum from 1981-86), Angola and Mozambique (US$4b per annum from 1976-80) and Vietnam (US$1b per annum from 1970-80). With the West pulling ahead both economically and in terms of technology, and the costs of subsidising the Eastern European bloc rising due to falling oil prices, the War was likely to pose a further strain on Soviet resources. The Soviet Union could not afford reform without a diversion of resources from the military. However, this diversion would be unthinkable if hostile relations with the West persisted. Only a less confrontational foreign policy would permit for lower defence spending (Painter). The success of perestroika thus depended on forging a new and less competitive relationship with the West.
The second reason why reforms required a relaxation of tensions with the USA was that upon embarking on the reforms, continued coercive control of Eastern Europe (a security imperative of a confrontational security policy) would have appeared incompatible with glasnost and perestroika’s aims of democratisation and economic reform within the Soviet Union (Painter). For the reforms to come to fruition, then, Gorbachev saw that he had to change the current confrontational foreign policy, specifically by “[seeking] paths to the limitation and reduction of military rivalry, to the removal of confrontational moments in relations with other states, to the damping down of conflicts and crises” and thus creating a more stable and predictable international environment for domestic reforms (Shevardnadze). The needs of domestic policy can thus be said to have merged with the failures of Brezhnev’s foreign policy to impel the Soviet Union to look for new approaches to foreign and military policy (Holloway). In other words, the reforms demanded a new relationship between the superpowers, and economic problems, in encouraging Gorbachev to undertake the reforms, contributed to the end of the Cold War.
However, the state of the Soviet economic and political systems was, while unsatisfactory, not dire to the point of impending disaster. On the economic front, problems were more signs of long-term terminal decline than imminent collapse; on the political front, there was little evidence of widespread dissent and organised opposition to the Communist Party of the Soviet Union. Economic and political problems were hence not pressing enough to force Gorbachev’s hand. Why then did Gorbachev pursue these reforms, and why was he willing to incur the required costs of undertaking them? To answer these questions, we must look beyond economic problems of the Communist bloc and acknowledge Gorbachev’s unique dedication to improving the USSR’s domestic situation, his personal sentiment towards security and nuclearism, and crucially his administration’s ‘new thinking’.
Gorbachev inherited the Soviet Union with economic and political problems that were, as established, serious but not urgent enough to oblige immediate action. It can then be said that he made a conscious choice to tackle these problems head-on. Another leader could have muddled through, but Gorbachev was determined to deal with the crisis (Holloway). Therefore, while there certainly were extensive economic problems, they did not necessitate the reforms. Rather, it was Gorbachev’s dedication to rescuing the USSR and establishing a new basis of foreign relations that explains his decision to adopt glasnost and perestroika.
Critically, it was Gorbachev and his administration’s radical redefinition of Soviet security, economic and social strategy – or ‘new thinking’ – that was most responsible for the birth of the reforms and their subsequent execution. In terms of economic and social development, the new generation of Soviet leaders saw that in a world of mutual interdependence, progress was unthinkable for any society which was fenced off from the world by impenetrable state frontiers and ideological barriers (Gorbachev). This explains the nature of the reforms he proposed – he chose to ‘open up’ on both the economic and political fronts because he no longer believed that a ‘fenced off’ system could herald progress. Furthermore, the leaders also advanced dramatically new ideas on Soviet security, now recognizing that they could not ensure their country’s security without recognizing the interests of other countries (Gorbachev). Old strategies which had required massive military spending like maintaining the Iron Curtain and the conventional and nuclear arms race were then obsolete. In light of this new rationale of global security, we can see why Gorbachev possessed both the desire and ability to redirect military resources towards domestic reform: he had realized that the crippling military expenditures did not in fact provide increased security, but were instead counter-productive. New strategic thinking thus explains the nature of the reforms Gorbachev proposed and also justifies why they were given the green light. In view of the aforementioned factors, we can see that economic problems only contributed in part to animating the reforms – and these reforms cannot be wholly credited with ending the Cold War.
Beyond enabling the domestic reforms to take place, ‘new thinking’ had further implications on the end of the Cold War. Gorbachev was not only willing to stop the competition with the US. More significantly, he begun to actively seek a new relationship with the US as a means of guaranteeing Soviet security, which he now believed was based not on the accumulation of military power, but on political measures like arms control and the settlement of regional conflicts (Holloway). Then, in the Soviet Union’s attempt to fulfil its newly defined security objectives, it completely altered its approach to international relations: via participation in an unprecedented number of summit meetings, establishment of a warm personal relationship with Reagan, adoption of a softer stance on Eastern Europe, and significant concessions such as the Intermediate-Range Nuclear Forces (INF) Treaty, withdrawal from Afghanistan, reduction in the Red Army of 500,000 and the withdrawal of 6 tank and assault division of Soviet troops from Eastern Europe, a different relationship with the US was successfully forged. This reappraisal of Soviet security strategy therefore precipitated the end of the Cold War by thawing East-West relations to a point where the superpowers no longer resembled adversaries. Moreover, as the Soviets no longer equated territory with security, they also no longer viewed the maintenance of the Iron Curtain security buffer as necessary. This explains why Gorbachev assented to the Eastern Europeans breaking away: the Eastern European bloc was no longer thought to provide the USSR additional security.
Apart from ‘new thinking’, Gorbachev’s aims of nuclear disarmament and the general renunciation of use of force also suggest a personal moral conviction independent of political or economic motivations. Initially, his willingness to contain and remove nuclear missiles may have been based on economic calculations or a means to get out of the impasse in the relationship with the West. However, his subsequent enthusiasm in improving East-West relations, his proposal of zero option and his willingness to enter into the INF Treaty all seem to arise from this deeper ethical awareness. Chernobyl possibly effected such a change – Shevardnadze commented that it “tore the blindfold from [their] eyes” and “convinced them that morality and politics could not diverge” – and Gorbachev might have also felt revulsion at the horrors of nuclear technology after witnessing a simulation attack. All in all, Gorbachev saw peace as the “value above anything” and a world war an “absolute evil”. Barring such strong personal beliefs, Gorbachev might not have been as determined or willing even to reduce conventional and nuclear arms, and the Cold War might have been further protracted.
Even if the relationship between the superpowers improved substantially, the Cold War could not have ended without the Eastern European revolutionaries: in bringing down the Iron Curtain – the original cause of the War – the reunification of Europe was both symbolised and actualised. At that point, Bush and Gorbachev were free to declare the Cold War over. To what extent did economic problems within the Eastern European bloc provide impetus for the revolutions? By the 1980s, the economic condition of many Eastern Europeans had declined and living standards fallen; there was widespread hardship behind the Iron Curtain. For instance, real wages declined by 17% in Poland and 15% in Hungary (Crampton). Many of the protests that erupted throughout the Soviet bloc were in part motivated by economic discontent. Notably, one of the most popular, vocal and well-organised movements – Solidarity in Poland – started out as a trade union outraged at the low wage level and poor working conditions. It gained 10 million supporters and was so strong that the Polish government conceded to all 21 of its demands in the Gdansk agreement.
However, while the economic imperative was indeed strong, it was far from being the only factor that urged the Eastern Europeans to revolt – far more salient is the nationalist sentiment within the states behind the Iron Curtain. Many Eastern Europeans had a strong national identity which had not been eroded by 40 years of Sovietisation, and possessed a fierce desire for national self-determination. This combined lethally with a number of other forces: firstly, the Eastern Europeans were increasingly dissatisfied with the corrupt and ineffectual elite. This was in part due to plummeting standards of living, but resentment towards these Soviet-backed regimes had long since existed. Secondly, the Soviet population was seduced by the material and cultural manifestations of the Western lifestyle (Deudney and Ikenberry). This undermined the ideological legitimacy of the Soviet system, altogether further weakening the tenuous hold regimes had on their people. As Moscow sent the signal of glasnost and it became increasingly clear that Gorbachev would not send in the tanks, uprisings unsurprisingly swept across Eastern Europe. By then, Gorbachev was unwilling to stop these movements as it would damage his international standing and be incompatible with the aims of domestic reform. These down-up revolutions – caused not “by a turn of the economic screw… [but by] political hopes” (Ash) – culminated in the collapse of the Berlin Wall and conclusively ended the Cold War.
Economic problems in the Communist bloc brought about an end to the Cold War because they motivated the Soviet Union’s domestic reforms, help explain the new Soviet attitude towards foreign relations and subsequently fuelled the Eastern European revolts. However, they were in both instances only one of many forces, most of which were significantly more important. Economic problems thus played an indirect role in ending the Cold War. Ironically enough, the end of Cold War arguably precipitated the worst of the Soviet Union’s economic problems, rather than the other way around.
McCauley, Martin. Russia, America and the Cold War 1949-1991: Revised 2nd Edition. Pearson Education, Seminar Studies in History, 2008.
Painter, David S. The Cold War: An International History. Routledge, 2001.

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