The Soviet Factor

INTRODUCTION

It is clear to every observer of the socialist camp that the collapse of socialism in the countries under review was only possible because the Soviet Union explicitly or implicitly allowed East European countries to go their own way.

ECONOMIC DEVELOPMENT

The Soviet Union, like the three countries under review, grappled with many similar economic problems, though there were also differences. The Soviet economy also exhibited declining growth rates from the second half of the 1970s. Of course, if we take the 1950s as a basis for a comparison, then the 1960s and 1970s could also be characterised as declining decades in economic growth. In my opinion, the 1950s are not an appropriate base because they can be largely regarded as a post­war reconstruction period. In the 1960s and the first half of the 1970s economic growth was in the order of 6.5 per cent, as reflected in national income produced. Even in the first half of the 1960s when the rate of economic growth in most East European countries declined (in Czechoslovakia there was an absolute decline), the Soviet economy exhibited a robust economic growth.

In the second half of the 1970s the economy took a turn for the worse and continued to decline in the 1980s with some interruption. The decline in the growth rate was caused to a great degree by the exhaustion of the extensive factors of economic growth. Employment in the economy grew by 3.8 per cent annually in the period 1961-70 and 2.5 per cent in 1971-5. This figure declined to 1.4 per cent in 1976-80 and to 0.7 per cent in 1981-5. In the period 1986-90 the figure grew by only 0.2 per cent (see SEzh, 1981, p. 410 and Table 10.1).

Net fixed investment in the economy grew by 2.6 per cent in 1976-80 and declined absolutely in the following years. In 1986-90 it decreased on the average by 6.7 per cent (see Table 10.1). If one considers that productivity indicators also worsened, then there is a clear answer to the question about the reasons for the declining economic growth rates.

The declining productivity growth rates were caused by various factors. One of the reasons for this was probably that the share in employment of non-European republics, where the labour force was less educated and less skilled than the national average, was increasing (see NK, 1987, p. 365).

Table 10.1 Some indicators of performance in the former USSR (annual growth rates in per cent)

* The GNP figures listed by CIA for 1981-5 are much smaller, on the average 1.75 (Noren and Kurtzweg, 1993, p.

^# The figures for 1986—90 and 1990 are estimates.

Sources: Figures for investment and prices for individual years except 1985 are from The National Economy of the USSR (1990). The rest of the figures are from NK_t 1990, pp. 6-8 and 36; SEzh, 1984, p. 282 and 1986, pp. 288 and 385.

Considering that the Soviet press from the 1970s on devoted great attention to labour discipline and called for its strengthening (Spulber, 1991, pp. 95-6), one can assume that there was a decline in the work ethic, which must have affected productivity negatively. The further loosening of discipline due to Gorbachev’s reforms certainly had a similar effect.

The decline in capital productivity was caused by the slow retirement of used capital. The plans for capital retirement did not keep up with the level of technology development, but even these modest plans were not fulfilled. On the other hand, there were cases where new machinery lay idle in warehouses for a long time.

High material intensity of products was another reason for low capital productivity. According to Khanin (1992, p. 78) material intensity increased by 17 per cent in the period 1981-90.

The high material intensity of products in the USSR affected not only the economy of that country, but also had an effect on the economies of the three countries under review, which satisfied most of their demand for raw materials from imports from the USSR. The increasing domestic demand for raw materials made it more difficult for the USSR to satisfy the growing demand of the smaller countries, all the more because extraction of raw materials was investment intensive.

Compared to the smaller countries, which were importers of oil, the USSR had a tremendous advantage in being an exporter of oil and its derivatives. The explosive price increases in oil of 1973 and 1979 had a destructive effect on the economies of the small countries, though not immediately since they were cushioned from the price increase effects by the CMEA price formula.

In addition, the Soviets did not consider seriously enough in their economic policy strategy the possibility that the high oil prices might be only a temporary phenomenon and that an opposite trend might set in. The decline in oil prices in the beginning of the 1980s found them unprepared to such an extent that their manoeuvring freedom was paralysed. And this had far-reaching consequences for their trade with East European countries. The Soviet Union was very much the engine which drove the East European economies because it was able to absorb huge imports and to export goods, mainly raw materials and oil, in return. In the beginning of the 1980s, the Soviet engine slowed down significantly and, as a result, trade relations with East European countries weakened. This aggravated not only the economic situation of the East European countries (Nyers, 1989), but also made it for Soviets more difficult to exercise control over Eastern Europe. After all, the control resulted not only from Soviet military might; economic dependence on the huge Soviet market and raw material deliveries also had much to do with it.

The Achilles heel of the Soviet economy was primarily agriculture. The country was not able to feed itself; it had to import huge amounts of grain in order to satisfy the demand of the population.

In the Soviet Union, despite great efforts and huge investments, amounting on the average to one third of total investments since the beginning of the 1970s (see The Economy of the USSR, 1990, p. 40^l), the performance of agriculture did not improve noticeably. In the second half of the 1970s and in the 1980s growth rates of gross agricultural production were low (see Table 10.1). According to The Economy of... (p. 4), which uses figures received from Soviet sources, the performance of agriculture was worse than indicated in Table 10.1. Agriculture suffered from many problems. The main reason for the need to import agricultural products was due to waste and great losses of food. ‘Substantial food losses arise because of shortages of packaging material, storage facilities, outdated processing technology and inadequacy in, and disruption of, transport’ (p. 40).

According to Khanin (1992, p. 78) there was a remarkable economic recovery in 1983-8 (an increase in national income of 11 per cent, an increase in labour productivity, and a halt in the decline of capital productivity), after a decline in national income in 1981-2 (4 per cent). He attributes this recovery to Andropov’s provisions and Gorbachev’s first year measures. Maybe their measures had an effect, but since in 1983-6 a simultaneous recovery was experienced in Poland, Czecho­slovakia and Hungary, one can speculate that the recovery was the result of cyclical development to a great extent.

In the following years, the growth rates of national income again started to decline and in 1990 there was an absolute decline in economic growth. In other words, Gorbachev’s reform did not cause a turnaround.

STANDARD OF LIVING

At the time when the Iron Curtain was tightly closed the Soviet propaganda portrayed the Soviet standard of living as one of the highest in the world and Eastern Europe backed it up. In reality, the Soviet standard of living was very modest; it was lower than in the countries under review.

After the Second World War real incomes per capita as well as real wages grew relatively fast, primarily the former in the 1950s, 1960s and the 1970s. The fast expansion of the economy was reflected in growth in the standard of living. The slowdown in economic growth in the second half of the 1970s and the 1980s (or decline, according to Khanin) was not reflected extensively in real incomes and wages. The Soviets used a portion of their receipts from sales of oil to maintain the standard of living.

This is not to say that everything about the standard of living was in order. The Soviet economy suffered from shortages which had their origin in the structural disequilibrium of the consumption fund. The Soviet planners had no great difficulty in planning a balance between the global income fund (minus expected savings) and the real consumption fund. But the planners had tremendous difficulty balancing incomes and demand for individual or for groups of consumer goods because of lack of information and the cumbersome­ness of the planning system. In enterprises a negative role was also played by the incentive system, which prodded enterprise managers to meet the targets regardless of the situation in the market. The supply situation was compounded by the shortcomings of the distribution system which allowed, in many cases, some products to be in abundance in one region while (an)other region(s) suffered from shortages. Needless to say, the Soviets could have mitigated shortages had they wanted to use prices to balance demand with the supply of goods. However, the Soviets were not willing to give up their rigid price stability policy in order to stave off the possibility of inflation.

In addition, the consumer goods mix was narrow and of shoddy quality compared with Western goods or even with Hungarian. The Soviet market mainly lacked modern electronic goods. Despite shortages, the supply of consumer goods was tolerable and exhibited an improving trend in the 1960s and 1970s.

In the second half of the 1980s, mainly in the last three years of Gorbachev’s administration, a dramatic change for the worse occurred in the supply of consumer goods. Due to the balance-of-payments deficit the Soviets were forced to slash imports of consumer goods. Soon a new factor aggravated the supply situation. Gorbachev wanted to increase incentives to work by widening wage differentials. The 1987 wage reform, aimed at widening differentials, was based on the idea that enterprises would be allowed to take advantage of it provided they were to pay for the increased wage costs from their own resources by achieving higher economic efficiency. Obviously, self-management bodies did not respect this rule, and the government was lax in enforcing it. In addition, there were increases in wages for non­productive services which came from the budgetary sources (Schroeder, 1992, p. 98; and The Economy..., 1990, pp. 7 and 10).

The income increases,² though they were justified in many cases, primarily for qualified workers if the narrow wage differentials were to widen and thereby to create stronger incentives, nevertheless con­tributed to the intensification of shortages. Income increases were matched neither by production increases in consumer goods nor by adequate import increases.

In 1990 and more so still in 1991, the shortages took on dramatic dimensions. The line-ups became longer and more time-consuming, and were often in vain. Apart from the reasons mentioned, there were also new ones. The increasing bickering among the republics and the loosening of discipline, which undermined the distribution system, were two of them. The situation was aggravated by the Moscow and Leningrad mayors, who forbade shopping for non-residents in their cities, a provision which triggered retaliation from other regions. The

growing trade deficit, which forced the USSR to slash imports of consumer goods, was another important factor in the growing shortages. Last but not least, considerable food hoarding, which was triggered by the government announcement of its intention to increase prices, made the situation even worse (Kondratenko, 1991).

ECONOMIC REFORMS

The 1965 reform was a minor reform, which did not exceed the framework of the traditional system of management, let alone the ‘perfections* of the system of management under Brezhnev. Even the ‘reforms* under Andropov do not deserve the name reform.

Gorbachev’s economic reform in 1987 was a major reform, but not a far-reaching one, considering what was happening in the smaller countries under review. It resembled very much the Hungarian 1968 economic reform,³ though in a watered-down form, combined with some organisational elements of the East German system. The reform also contained some components from the Chinese reform.

The main objective of the reform was to make enterprises work more efficiently and produce higher-quality goods in response to demand by giving them greater autonomy and making them adhere to the principle of self-financing. Enterprises were given greater decision-making powers in matters of output mix, price, wage, incentives and investment determination. The central planners were to use more indirect methods in steering enterprises.

The reform was in substance formulated in the Law on State Enterprises (P, 1 July 1987). According to it, enterprises were allowed to work out and approve their own five-year and annual plans. However, five year plans had to be worked out on the basis of non­binding control figures, state orders (contracts), limits and normatives. The control figures, which had an informative function for enterprises, included indicators of production in value terms which were to serve as a basis for concluding contracts between producers and buyers, profit, indicators of technological progress, etc. State orders (contracts), which were compulsory, referred to defence, centralised investment projects, important kinds of production, significant technical pro­grammes, etc. They could be distributed by tender. They were supposed, apparently according to Chinese example, to take up only part of enterprise capacity; the rest of the capacity could be used by enterprises according to their choice. In contrast to the Chinese, where this dual system in the use of enterprise capacity was combined with a dual system in pricing, only one pricing system existed in the Soviet reform for both state contracts and enterprise choice of production. The planned state orders for 1988 took up most of the capacity of many enterprises and thus became another form of assigned targets. Limits referred to inputs and some investments. Because of shortages, allocation of inputs was to be only gradually eliminated. From the foregoing it is clear that output mix was to be, to a great extent, determined from above. This was not supposed to deprive enterprises of options or the possibility of selecting partners for contracts.

Gorbachev’s reform put great stress on economic normatives, which were not a new instrument; they were introduced for the first time in 1979. Long-term normatives had to be set for the distribution of profit between the state and enterprises, for determination of the wage bill, for the incentive fund of enterprises and the development fund.

Gorbachev’s reform promised quite far-reaching changes compared to the traditional system. The mutual linkage of domestic price circuits (between wholesale and retail prices, and between agricultural procurement and wholesale prices) was to be restored. Fixed prices were to be limited to goods of national economic and social importance. Otherwise contractual and even free prices were to be applied.

For the first time in post-war history the 1987 reform made changes in the rigid state monopoly in foreign trade. Many ministries and associations were given the right to engage directly in foreign-trade operations.

What was quite surprising was that the idea of enterprise self­management, which had been resented by the previous communist leaders for fear that it might reduce the power of party organisations, was introduced by Gorbachev’s reform. The self-management bodies were given quite considerable rights; they were, however, to be steered by CP organisations. Apparently, Gorbachev agreed not to antagonise CP organisations.

The process of concentration in industry continued in the 1980s; the number of associations (groups of enterprises) grew fast. Gorbachev’s reform did not stop it; on the contrary, it seems to have strengthened it.⁴

Gorbachev’s reform also brought about some changes in agriculture; however, they were not very radical. It seems that, here too, Gorbachev followed the Chinese example but with small success. Cooperatives were allowed to lease land to farmers, and thus family farms arose (Aslund, 1991, pp. 102-3). However, in the USSR the agricultural changes never took on such importance as in China.

There was also some concession to private ownership. Individuals or families were allowed to produce consumer goods after normal work time in their main job. In other words, private small businesses were not allowed to employ non-family members. Later, the newly permitted cooperatives in the non-agricultural sector were allowed to employ non-members and in such a way they became a cover-up for private enterprise (for more, see Hanson, 1990, pp. 83-94).

Some of the changes mentioned were to be implemented instantly, some gradually, but the whole reform was supposed to be in force in 1991.

The reform was, no doubt, an improvement over what had existed before. Yet many important elements of the traditional system remained. The assignment of targets was not eliminated; it was replaced by state orders whose role was supposed to diminish in the course of time. However, the institution of overfulfilment was done away with. Rationing of inputs continued because of shortages. There was a promise to switch to a market for inputs within four or five years. All this meant that the authorities continued to interfere with the day- to-day operations of enterprises with all the consequences of bureau­cratic arbitrariness and bargaining, and strains on self-financing. Nevertheless, the rights of enterprises expanded substantially.

The authorities tried to regulate some microeconomic tools with the help of stable long-term normatives, an undertaking which raised doubts about its practicality, especially with regard to wages and incentives. A five-year period is too long for realistic normatives to be set.

The idea of self-financing was not new in the history of Soviet efforts to improve the working of the economic mechanism; it can, however, work only under certain conditions. And the Soviet reform did not produce these conditions.

I have mentioned only some contradictions built into the reform itself so that it could not achieve even its limited goals. As will be shown later in connection with the discussion of the restructuring of the political system, even the potential pluses of the reform did not materialise. Further developments in the Soviet Union made the reform obsolete.

In the fall of 1989 the Supreme Soviet passed a bill on the transition to a market economy. This did not mean that the authorities wanted to drop planning altogether. In the CC resolution of February 1990 (Towards a Humane..., 1990, p. 29) there was still talk of a planned market economy. It did not take long for planning to be relegated to an adjunct of the market mechanism and later dropped altogether.

Once the decision was taken to make a transition to a market economy, an array of proposals on how to carry it out emerged. The two best-known proposals were Shatalin’s 500 days programme (Perekhod..., 1990) and the Yavlinski-Allison reform plan (1991). The first proposal was prepared at the request of Gorbachev and Yeltsin, a remarkable event considering that the two politicians were engaged in a power struggle. Shatalin’s programme, which was based on republican sovereignty, was welcomed by Yelstin, but rejected by Gorbachev who wanted to sustain the Union, though in a loose federation. The programme was unrealistic in any case; it was an illusion to put the Soviet Union on the path to a market economy and carry out privatisation of a major part of the economy within 500 days.

The Yavlinskii-Allison programme was more realistic in that its planned implementation was spread out over a longer period (1991-7). However, it was based on the assumption of Western help. Its departure point was sovereignty of the republics, but it assumed that there would be a single market for the Soviet Union with a uniform monetary policy and a Central Bank. The political events in the Soviet Union, which resulted in its collapse, made the Yavlinskii-Allison programme useless (for more, see Adam, 1993, pp. 209-13).

In all three countries the 1987 Soviet economic reform had an impact. In Czechoslovakia, where the leaders were rather anti-reform minded, they nevertheless decided to follow the Soviet example and introduced more or less a similar reform as in the USSR. In Hungary and Poland, the economic reforms introduced earlier went much further than in the USSR. But the 1987 Soviet reform seemed still to have an effect. In 1987 a second stage in reforms in both countries came into being, reforms which meant an important leap in the direction of marketising the economy. These changes were probably only possible because of changes in the USSR. Seeing what was happening in the USSR, the opposition in both countries was emboldened to a further push for radical changes in the economic system. Additionally, the governments in both countries did not have to resist the changes because of possible criticism from the Soviet Union.

POLITICAL REFORM

Unlike his predecessors Gorbachev combined his economic reform with political reform. He realised that the economic reform could be successful only if it was combined with changes in the political system. Only by giving people greater freedom and rights could it be expected that they would reciprocate with greater effort, initiative and dynamism. Probably he realised that the rigid, authoritarian regime was untenable in the long run and unnecessary. If the CP was serious in its rhetoric, namely, that what it was doing was for the good of the people, then it should not be afraid of the people. Distrust of the people necessarily leads to distrust of government in a great part of the population.

Did Gorbachev have a well thought-out concept of the political reform? It is not entirely clear how far he wanted to go in the democratisation of the system. It is not clear to what extent the real development in the political system was in tune with his concept and to what extent he was pushed by forces which his reform generated

It is obvious that Gorbachev wanted to maintain the socialist character of the Soviet Union and that he did not want to turn the Soviet Union into a capitalist state. After all, Gorbachev even now professes to be a socialist. There is also no doubt that Gorbachev wanted to sustain the integrity of the USSR. It is not clear whether he realised that a far-reaching reform, particularly of the political system, concealed within it great dangers for socialism and the integrity of the USSR. He should have known that such a reform is equal to walking on the edge of a cliff and therefore caution should have been used in pacing and coordinating the political with the economic reform.

Gorbachev started out with economic reform. But he soon turned his attention to political reform. In his report to the CC in June 1987, which contained a proposal for a radical economic reform, he did not mention the need for a radical political reform. He suggested only the need for the democratisation of the political system, as an important precondition for a better working of the economy and elimination of the alienation people felt about the Soviet regime. At that stage it was not clear what Gorbachev meant by democratisation and how far he was willing to go. True, there was already a considerable relaxation of press censorship, people were no longer afraid to vent their dissatisfaction, the power of the police was curbed, etc. It is known that during the reforms of the 1960s Czechoslovak and Hungarian politicians also talked about the need for democratisation, but in fact they were determined to maintain the leading role of the CP and not allow any changes which might endanger it in the long run. What they were willing to do was to make changes at the edges of the political system by eliminating excesses in the working of the system, and by making the judicial system more independent. In brief, they wanted to give the system a more human face.

The Nineteenth Party Conference, which took place from 28 June to 1 July 1988, was an important milestone in the reform of the political system. At the conference the shortcomings of the political system were discussed and proposals suggested on how to reform it. Soon a resolution was approved to reform the electoral system by giving the public more say in the choice of candidates and by allowing more candidates to be fielded than there were seats. The new electoral system was not based on the idea of a multi-party system. Nevertheless its structure meant the rise of a multi-party system in an embryonic form: the electoral law allowed groupings of voters of 500 or more to nominate more than one candidate. At the same time the electoral system allowed representation for social groups, such as the CP, trade unions, the academy of science etc. a provision which was in effect a violation of democratic principles of elections (White, 1992, pp. 31-4, 46-7). The idea behind the special treatment of social groups was probably dictated by the desire to make sure that the political leaders would be elected, and thus avoid an embarrassment which might have occurred if the leaders had to go through a democratic election. In order to conceal the real intention of the special treatment, it was not confined to political leaders. The 1989 elections to the Congress of People’s Deputies took place according to this law. In many republics, including the Russian, in the elections to their Congresses, which took place in 1990, the special treatment of social groups was dropped, and candidates were allowed to form blocs (White, 1992, p. 59). In other words, these elections can be regarded as free, democratic elections.

In 1990 political parties started to emerge and in a short time there were parties with right, centrist and left programmes. There was no shortage of monarchist and anarchist groupings. The February 1990 meeting of the CC more or less sanctioned such development. Its resolution submitted to the Twenty-eighth Party Congress, which was held in July 1990, read:

The democratisation of our society is accompanied by the emergence of new sociopolitical associations. The development of society does not preclude the possibility of forming parties... The Communist

Party of the Soviet Union does not claim a monopoly and is prepared for a political dialogue and cooperation with everyone who favours the renewal of socialist society (Towards a Humane..., 1990, p. 33).

The resolutions of the Twenty-eighth Congress stated ‘The entire political superstructure is being radically altered, and true democracy is taking root, asserting human rights, free elections and a multi-party system’ (Documents..., 1990 p. 96).

Of course, the rise of new parties threatened the leading role of the CP. Gorbachev and his associates saw a solution to this problem in the institution of the presidency with broad powers. Such an arrangement had to allow the president to curb the possible rise of forces which might endanger the system. In addition, it had to allow the president to be independent of the CP, mainly if the president was elected by the population. The law on the institution of presidency envisaged a popular vote, but for the first presidency an exception was made. Gorbachev was elected by the Congress of People’s Deputies in March 1990 (White, 1992, p. 66). The institution of the presidency was combined with a transfer of some power from the central authorities to the Soviets as the local authorities.

The changes in the political system were much more radical than in the economic system. Gorbachev failed to coordinate the two reforms adequately. It was easier in the Soviet system to bring about radical changes in the political system, which found approval amongst the public, than to improve the economy through changes in the economic mechanism. Gorbachev took over a strict authoritarian regime and every relaxation was gladly received.

The political reform eroded to a great degree the working of the economic mechanism which was in the process of reform. As is known, the old system was strictly hierarchical; orders were transferred from the centre through the chain of command down to enterprises. Discipline and obeying orders and instructions was crucial for the working of the system. If one of the links in the chain of command failed, the system could not work effectively. Larger breakdowns in the command system could endanger the whole system. The political system loosened discipline at the time when there was a transition to a new economic mechanism which still relied heavily on discipline.

Because political reform was combined with an unsuccessful economic reform which deepened the malaise of the economy, Gorbachev, who was very popular abroad, was gradually losing support at home at a time when he needed it very much in order to transform the Soviet Union, be able to change the economic system, and win the power struggle with Yeltsin.

The changes in the political system eroded the leading role of the CP. With the rise of new parties the influence of the CP declined. In addition the Party discipline was weakened which found its expression in the emergence of strong factions within the Party (Gill, 1994, pp. 144-53). A process of rapid disintegration of the CP started.

The political changes had their impact on the nature of the changes in the programme of the Party. Without going into detail it is important to mention that the proposal for the Fourth Party programme - as explained in the session of the CC of the Soviet CP by Gorbachev (P, 26 July 1991)- was imbued with social democratic spirit. It stated that the Party was a party of democratic reforms and that revolutionary methods in the new conditions were no longer necessary. The idea of communism was left out; Gorbachev substantiated this step by arguing that the programme was intended to be a realistic document. The proposal also contained the idea that Marxism-Leninism should not be the exclusive ideological arsenal of the Party.

THE TRANSFORMATION OF THE UNION

The democratisation provisions, mainly those allowing freedom of speech, brought to the surface various grievances which had been dormant for decades. The worst grievances stemmed from the long suppression of national and ethnic aspirations. Political freedoms opened many old wounds, and gave a good opportunity to politicians to base their political careers on the rising nationalism, and they therefore fanned nationalistic sentiments. There were many justifiable grievances; some of the republics had been forced to join the Soviet Union; the Baltic states were the last case. The rights promised in the constitution to individual republics and autonomous regions were ignored by Moscow to a great degree. The attempts to impose the Russian language at the expense of national languages was resented. There were not only grievances vis-a-vis Moscow; there were also unresolved national problems among the republics or within republics. The most classic conflict was and is between Armenia and Azerbaijan about an enclave (Nagorno-Karabakh) which is inhabited by Armenians. The Baltic states were the first to demand the restoration of their independence.

It was assumed that the Ukraine would be the greatest obstacle to maintaining the Soviet Union’s integrity. In reality, it turned out that it was Russia, under the leadership of Yeltsin, which brought the Soviet Union to an end. Gorbachev made a big mistake in not putting the solution of ethnic problems among his first priorities. He must have known that, once the political system was reformed and human rights were restored to a great degree, the Soviet Union, a country made up of many nations and nationalities and largely held together by force, would face the danger of disintegration.⁵ Therefore it was necessary to act quickly before local politicians could fan nationalistic sentiments to the extent that an agreement was impossible.

This required a restoration of independence to the Baltic states without delay. True, Gorbachev was afraid that the restoration of the independence of the Baltic states would encourage other republics to demand independence. Perhaps such a danger existed, but it could have been countered by showing that the occupation of the Baltic states was an act dictated by the danger of a German attack on the Soviet Union, which really happened. The reluctance to respond quickly to the demands of the Baltic states festered old wounds and strengthened forces in the West which wished for the disintegration of the Soviet Union.

Gorbachev and his associates apparently themselves recognised that they had neglected the nationality problem of the USSR, for they allowed criticism of this point to appear in the resolutions of the Twenty-eighth Congress (unless, perhaps, it appeared against their wishes). The resolutions read: ‘top leadership have failed to realise the magnitude of the deformations and contradictions in the national policy promptly enough, to anticipate their impact on the course of perestroika’ {Documents..., 1990, p. 125). The Congress decided that the Soviet Union should be transformed into a Union of sovereign states in the sense that all the republics would enjoy equal rights in the renewed union. The worked-out union treaty was approved in principle by the Congress of People’s Deputies in December 1990 and in April 1991 by a referendum in which 9 republics, including Russia and the Ukraine, took part. It is interesting that there was no mention of socialism in the treaty; the republics only committed themselves to the principles of democracy, human rights and social justice.

After difficult negotiations Gorbachev managed to work out with the republics a final and concrete compromise union treaty, according to which defence, foreign policy, transport, communications, energy and the central budget would be decided in consultations between the centre and the republics, whereas all other issues would be decided by the republics. The signing of the treaty was scheduled for August 20. However, it could not take place because on that very day a coup d^,etat was attempted, with the apparent purpose of preventing the signing of the union treaty because the plotters opposed the weakening of the Soviet Union. However, the plotters’ action brought about the opposite to what they intended to achieve: one republic after another declared independence. After the collapse of the coup Gorbachev again tried to put together the union treaty, but failed. The coup opened the way for Yeltsin - who on the one hand organised a successful resistance to the plotters and, on the other, destroyed the union by his intrigues - to outmanoeuvre Gorbachev.⁶ The Commonwealth of Independent States, which Yeltsin put together, meant an end to Gorbachev’s presidency (for more, see White, 1992, pp. 175-83).

GORBACHEV’S AND YELTSIN’S STRUGGLE FOR POWER

The conflict between Gorbachev and Yeltsin was fateful for reforms and for the survival of the USSR. If not for Gorbachev, Yeltsin would have probably remained a little-known politician. Gorbachev gave him the political base for his political growth and influence in appointing him the first secretary of the Moscow Party organisation. Yeltsin used this position for two purposes: one, to blacken the leadership of the CP for not proceeding fast enough with reforms and for not liquidating some of the old privileges of the communist elite and second, to endear himself to the masses by criticising the shortcomings in the supply and the quality of goods. As could be expected he was soon involved in a clash with Gorbachev, who relieved him from his function in the Party, but Yeltsin still got a cabinet position. He was already being treated in the new spirit.⁷

Yeltsin was not discouraged; he cleverly started to build a political base from which he could challenge Gorbachev and eventually defeat him. He started to clamour for equal rights for Russia, arguing that Russia did not have all the institutions that other republics had and that Russia subsidised other republics (cf. White, 1992, p. 173). Russian nationalism became his trump card; he tried and with success to whip up Russian nationalism and to present himself as its protector. Considering that Russians occupied the most important positions in the CP and government, his trump card was a strange one. But Yelstin managed to make it work, and this was important.

In the first elections to the Russian Congress of People’s Deputies, which took place in March 1990, Yeltsin was elected deputy and chairman with a huge majority. In order to increase his prestige, he wanted to become the president elected by popular vote. His ambitions were fuelled by the realisation that a presidential post achieved through a popular vote would give him an advantage in his power struggle with Gorbachev, who was not elected by the people. The Congress was against such an election for fear that this would give him too much power. However, Yeltsin found an ally in A. Rutskoi, who was the leader of a moderate faction of the CP, and with his support he gained a majority for his presidency plan in the Congress. Rutskoi was rewarded for his services by becoming the vice-presidential candidate on Yeltsin’s ticket. Both were elected in June 1991.

The presidency gave Yeltsin a powerful springboard for his power struggle with Gorbachev. And he used it to his advantage. That the unity of the Soviet Union as a loose federation or confederation became a victim in this fight for power was not a high price for Yeltsin to pay.

Yeltsin understood that his success was contingent to some extent on the West, mainly the USA. In addition, he was jealous of Gorbachev’s popularity in the West. His first trip to the USA in 1989 was a disaster. This was largely due to his own doing, to his unusually rough behaviour, and the American underestimation of his capabilities. Yeltsin wanted very much to see the president, but the latter was not eager to meet him lest it should offend Gorbachev. In addition, Bush did not hold Yeltsin in high esteem. According to Beschloss and Talbot (1993, p. 103) Bush thought ‘Yeltsin to be a loose cannon on the slippery, rolling deck of Soviet politics, with his reputation for heavy drinking, intemperate behavior and impolitic outbursts’. Judging from the monologue Yeltsin presented to Scowcroft (national security assistant) and Baker (Secretary of State), it is clear that he wanted to show the president that he had a better plan than Gorbachev for transforming the Soviet economy. After the meeting with Scowcroft, to which Bush and Quayle dropped in for a short period, Yeltsin told the press corps that he presented a plan to the president on how to rescue perestroika. His presentation was not appreciated very much because he manifested little knowledge of economics (ibid., pp. 104-5).

It has already been mentioned that Gorbachev and Yeltsin could not agree on the concept of economic reform. There were some differences in how they envisioned the transformation of the economy to a market economy, but these were not decisive. The main reason for disagree­ment, which was also reflected in each one’s distinct approach to economic reform, was that the two politicians had different views on the transformation of the Union. Gorbachev wanted to maintain a loose Union whereas for Yeltsin this was not a priority because it would have kept Gorbachev in his position as president. The aborted coup solved the problem, as already mentioned above, in Yeltsin’s favour.

GORBACHEV AND THE SMALL COUNTRIES

Being dependent on Moscow, East European communist leaders followed changes in the leadership of the Soviet CP and government with great interest and anxiety. This was mainly true of countries which did not want to follow the Soviet model in all respects, which were engaged in economic reforms and which were considering some political changes. The permanent question in their mind was: how will Moscow react? Gorbachev’s ascendancy to power was also received in the capitals of Eastern Europe with curiosity and apprehension. It was soon discovered that with Gorbachev the Soviet Union had received a new type of leader. He was young, energetic, and what was more important he had a new approach to people and problems.⁸ Unlike his predecessors who had avoided direct contact with ordinary people and mostly talked about problems in slogans, Gorbachev sought opportunities to talk to people and reacted to the problems brought up concretely, and was not afraid to criticise mistakes. In addition, he soon made it clear that he was going to reform the Soviet system. For the leaders and dissidents alike of the countries under review, the direction of the reforms and how they would influence the relationship of Moscow to the small countries was of great importance.

In the first years of Gorbachev’s tenure there were no great changes in the relationship between Moscow and the small countries. The latter still consulted Moscow if they intended to make important decisions, in domestic as well as in foreign policy, and Moscow’s view still could not be ignored. There is some evidence that even at the beginning of 1989, when the process of disintegration of the one-party state had progressed quite far in Poland and Hungary, Moscow was still consulted and listened to.⁹ In his book about the 1989 political events, I. Pozsgay (1993), who was the leader of the opposition within the Hungarian CP, talks about his intention to split the Party by leaving it and taking his supporters with him. But before doing so he consulted A. Yakovlev, a member of the Soviet politburo, whom he met in Rome at the congress of the Italian Communist Party. When Yakovlev advised him to support Grosz, the general secretary of the Hungarian CP of the day, Pozsgay abandoned his plan for the time being (p. 122). However, several months later, in September 1989, the Hungarian government in consultation with the West German opened the borders to East German tourists, an event which, as already mentioned (see p. 217), had far-reaching consequences for the socialist system in Czechoslovakia and other socialist countries, and the government did this without consulting Moscow. M. Nemeth, the prime minister of the day, maintained in an interview that he did so because he was convinced, on the basis of a talk with Gorbachev in the beginning of 1989, that Moscow no longer stuck to the Brezhnev doctrine (Nsz, 8 September 1994).

During the tenure of Gorbachev’s predecessors, the reform-minded leaders of the small countries had good reason to be apprehensive of Soviet pressure; under Gorbachev the situation changed. Once he put his mind to political reform and progress was made in this respect, he soon got ahead of the old reformers in the small countries.

In Hungary the opposition to the regime came, as already noted, chiefly from within the CP. The political changes in the Soviet Union, the substantial elimination of censorship, the extension of human rights - all these innovations in the USSR were a great encouragement to the opposition within the CP.

Soviet political reforms also emboldened opponents of the regime outside the Party to intensify their organisational and recruitment activity. Opposition activity which had bubbled below the surface for some time started to surface. The first semi-public establishment of the Hungarian Forum Party, which was until the 1994 elections the ruling party in Hungary, occurred in 1987. What is interesting is that the forum for this action was created by a member of the politburo of the CP, I. Pozsgay (Pozsgay, 1993, p. 82). All this happened at a time when Kadar was still in power. Once the first signs of the rapid weakening of the authority of the Party became apparent, the anti-communist ranks started to swell with genuine dissidents, opportunists and also people who were looking for cover. The growth of anti-communist parties was encouraged by an increasing demoralisation in the ranks of the CP apparatus.

In Poland, the developments in the USSR strengthened the hand of Solidarity. The movement, which was forced underground and had its influence reduced considerably, got a powerful boost from the events in the USSR. In 1981 the Polish government was afraid not only of the political ambitions of Solidarity, but also of the economic and military threats coming from the USSR. It felt that failure to restrain Solidarity would not only result in economic punishment, but might endanger the sovereignty of Poland. The concern about a negative reaction from the USSR was no longer an issue. In 1989, when the Polish CP decided to legalise Solidarity and to engage in a Round-Table discussion about the further development of political and economic life in Poland, it had the support of Gorbachev (see Bcschloss and Talbot, 1993, p. 53).

The Czechoslovak CP tried to ignore the political developments in the USSR. It was determined to maintain the status quo, all the more because the opposition was weak. It was embarrassed when the Soviet Union, which was portrayed in the propaganda as a friend whom it is worthwhile to imitate, started to dismantle the authoritarian regime, but nevertheless the Czechoslovak CP was not willing to budge. Even the promise of a political reform and the adoption of a new electoral system by the Soviet Congress of People’s Deputies in 1988, which allowed the nomination of candidates by popular groupings, did not impress the Czechoslovak leaders. The developments in Hungary and Poland which brought about the end to the communist regime had, of course, an impact in Prague. Still, in September 1989 Jakes, the First Secretary of the Czechoslovak CP, said in Prague to the visiting M. Rakowski, the Secretary General of the Polish CP of the day, that as long as the stores were well stocked, the opposition would not have its way (Rakowski, 1991, p. 257). He turned out to be wrong: the domino effect soon brought down the Czechoslovak regime. Once people went into the streets at the call of the opposition, the Czechoslovak CP agreed to a dialogue which eventually led to a relinquishment of power by the CP. That the opposition dared to call the people into the streets and that people followed that call, was possible because in the neighbouring countries the communist regime had fallen without the Soviets taking any counter-measures.

THE ROLE OF THE WEST

Gorbachev and his associates wanted to achieve an increase in economic efficiency by the economic reform they had introduced and thus a turnaround in the economy, not only because they desired to better the material situation of the population and to strengthen the reformed regime, but because they also saw the reform as a response to recent developments in the international arena. Their main rival, the USA under Reagan’s administration, embarked on a huge expansion of its military might, taking advantage of its technical superiority, with the apparent intention of forcing the Soviet Union into a stronger armament race in the hope that the latter, due to its much weaker economy, would exhaust itself.¹⁰ I doubt that Gorbachev hoped that an economic reform would bring such a turnaround in the economy and in technological progress that would enable the Soviet Union to respond to the American challenge. Gorbachev probably knew that the Soviet Union could not win the race with an increasingly ailing economy and did not regard such a race as being in the interest of the Soviet Union. In addition, the arms race was anyhow a big burden on the economy which could not be increased without bringing about a further worsening of the performance of the economy and a decline in the standard of living. Unlike his predecessors, he was looking for reconciliation rather than confrontation with the USA. Needless to say, reconciliation on terms favourable to the Soviet Union depended very much on the strength of the economy^1, and the economic reform was supposed to strengthen the economy.

The economic reform was also intended to strengthen the Soviets’ standing in the world. The lag in technological progress behind the West undermined the Soviet position in the eyes of East European countries and many Third World countries, though the USSR extended generous assistance to several of the latter. The economic reform was supposed to cure this problem too.

To convince the USA that in the Soviet Union a change in thinking and attitude to international problems and the West, especially the USA, had occurred, it was necessary to make some concessions to the West. Therefore Gorbachev made many concessions to the USA in the disarmament agreement by, among other things, accepting an asymmetrical reduction in conventional forces and weaponry and an unconditional withdrawal of the Soviet army from Afghanistan.

There is no doubt that the West, primarily the USA, supported the oppositions in East European countries, mainly the Polish Solidarity.¹² But it also leaned on the Soviet Union in regard to Eastern Europe, mainly when signs of the disintegration of the socialist system showed up in Poland and Hungary. Beschloss and Talbot mention in their book (1993, pp. 13-14) that, on his visit to Moscow at the end of 1988, H. Kissinger, the former Secretary of State, handed a letter from Bush to Gorbachev which contained, among other things, a proposal for a deal about Eastern Europe. The proposal, which was the work of Kissinger himself, suggested that if the Soviets promised not to use force against reforms and accept liberalisation in Eastern Europe, the West would commit itself ‘not to exploit the economic or political changes that occurred there at the expense of “legitimate” Soviet security interests’ (p. 13). Gorbachev did not give a direct answer to this proposal. Allegedly, his adviser for Eastern Europe, the philosopher G. Shakhnazarov, was in favour of the proposal and suggested accepting it (p. 16). Needless to say, this was not the only proposal which exerted pressure on Gorbachev not to interfere in the developments in Eastern Europe and to leave it to its fate. It was difficult to resist American pressure at a time when the Soviets wanted to show that they meant seriously their statement of new thinking. Gorbachev was all the more responsive because he was very busy with internal affairs, fights within the CP, and the effort to sustain the integrity of the Soviet Union. Attempts to stop developments in Poland and Hungary, the two countries where the disintegration had progressed the furthest, probably would have led to great tensions. In addition, the Soviets could no longer rely on finding reputable allies among local leaders in the two countries who would be willing to assist in stopping the collapse of the socialist system.

M. Rakowski (1991, pp. 247-8) maintains that the Soviet decision to let East European countries go their own way was the result of a desire to give priority to its own interests. In the 1970s and 1980s the Soviets subsidised East European countries. By allowing them to make decisions independently about their destiny the Soviets absolved themselves from any material responsibility for East European countries. For this reason Gorbachev’s statement in Kiev in February 1989 that Soviet relations with East European countries must be based on ‘unconditional independence... full equality and strict non­intervention in internal affairs’ was not accidental (P, 24 February 1989).

One can speculate that Bush offered a reward in the form of support for the integrity of the Soviet Union if the Soviets relinquished Brezhnev’s doctrine. This might have been the reason why Bush discouraged the Ukraine from seeking independence, by denouncing nationalism in a public speech in Kiev in August 1991 (Bcschloss and Talbot, 1993, p. 418). Perhaps up to the coup d’etat Bush supported Gorbachev and indirectly his efforts to sustain the integrity of the Soviet Union, though some of the American president’s advisers opposed this because they believed that Yclstin had a better chance to gain the upper hand in the power struggle. In addition, they believed that Yelstin was prepared for more far-reaching reforms than Gorbachev. After the aborted coup the US administration shifted its support to Yelstin and indirectly and directly supported the disintegration of the Soviet Union.

CONCLUDING REMARKS

There is no doubt that, without the explicit or implicit approval of the Soviet Union, Poland and Hungary would not have been able to change their economic system, and the domino effect would not have come into play. That the Soviet Union agreed to such a development in the two countries was only possible because it itself had started to change radically. This is not to say that Gorbachev wanted capitalism. In my opinion he aspired to market socialism, but his policies and the rivalry with Yeltsin caused the political power to slip from his hands.

Gorbachev did not manage to coordinate properly the economic and political reforms. The political reform was carried out at a much faster pace than the economic reform and in addition the latter was a failure. All this contributed to the economic crisis, which was one of the contributing factors to the collapse. The political reform loosened discipline, introduced uncertainty and resentment in the ranks of the elites, and aroused fear in the minds of bureaucrats for their positions. All this happened at a time when the traditional system, which was based on strict hierarchical discipline, was already undermined, but not yet replaced by a new reformed system. Later the arguments about the transition to a market economy made the situation worse. Gorbachev himself later acknowledged that the improper coordination of the two reforms was a great mistake.

Of course, the worsening economic situation and increasing difficulties in supplying the population with consumer goods and services contributed to the collapse of the system. The arms race, competition with the USA for spheres of influence in the Third World countries, and the adventurous and costly war in Afganistan - all drained the resources of the USSR and contributed to the worsening of the economic situation.

Another mistake Gorbachev made was that he delayed the reform of the structure of the Soviet Union too long. It would have been prudent to start political reforms with the restructuring of the Soviet Union into a genuine federation or confederation in which all the republics would be given equal rights. To a large extent such a step would have deprived many politicians, including Yeltsin, of the possibility of using genuine republican grievances to fan nationalistic sentiments.

The struggle for power between Gorbachev and Yeltsin was no doubt fatal for the integrity of the Soviet Union and also one of the main reasons for the disintegration of the CP and thus for the collapse of the socialist system. The power struggle also contributed to the failure of the economic reform. The two competed for support within and outside the country. In the competition within the country Yeltsin had the advantage of being in opposition to Gorbachev, who was responsible for the performance of the economy and the well-being of the population at a time when both were rapidly declining. In addition, Yeltsin managed to position himself at the head of Russia, where Gorbachev also had residence, which meant that once the Soviet Union disintegrated, Gorbachev lost his power base. Once this happened the competition for outside support was also decided.

The implicit, public relinquishment of Brezhnev’s doctrine came in February 1989. It can be assumed that already earlier, the Soviets had decided not to interfere if some of the small countries left the socialist camp or if some of the countries did not want to engage in reforms. This change in relationship to the small countries of CMEA was motivated by several considerations. Perhaps the most important was the desire to improve relations with the West and thus to slow down the armament race which was imposing an increasing financial burden on the Soviet Union. A change in thinking about the importance of the small countries for the Soviet security strategy and about the relations between sovereign countries probably played a role too. Internal infighting, which absorbed a lot of time in Gorbachev’s administration, was also a factor. And finally, the lack of funds to help the smaller countries to extricate themselves from their difficult situation was given some consideration when new Soviet relations with smaller countries were determined.