COMECON 1949-1969 Historical Atlas
European Integration

COMECON, 1969-1989

In 1962, MONGOLIA joined, in 1972 CUBA, in 1978 VIETNAM.
The OIL CRISIS of 1973 hit the COMECON economies hard, as the USSR was the only member nation able to export oil, which it did in exchange for socialist currencies ('soft currencies') and at prices which meant a virtual subvention of their allies. Yet the amounts exported were limited, the individual socialist governments faced the necessity of earning hard currency wherever possible.
Practically anything marketable in the west was exported, Rumanian beef, used books from Czechoslovakia's libraries etc. East German cars were exported to Iceland. Despite tha fact that hardly any meat was available on the local Rumanian market, that East Germans had to wait c. 12 years for the car they had ordered. Especially detrimental was the policy of East Germany, Czechoslovakia, Poland to reduce oil consumption by constructing more coal-based power stations - without filters; pollution became so bad, that the forest on the Elbsandstein mountains located on the border between Czechoslovakia and East Germany died, that snow, in the vicinity of East Germany's coal-based power stations, fell in brown colour.

The Hungarian leadership under Janos Kadar had com up with the concept of GOULASH COMMUNISM - in ideology and foreign policy hardline, but pursuing a flexible economic policy. The worst case of an East European socialist economy was Poland, where, in the 1980es, the supply situation was so bad that COUPONS had to be used for almost everything, that at any given time many employees were absent from their jobs because they were standing in line somewhere (if state-run shops had stored a product, it was imperative to join the line; otherwise they had run out of it by the time you went there).
A BLACK MARKET emerged almost everywhere, where goods were offered at prices much higher than the subventioned store prices, but here the basic goods were available, while the official stores were out of almost everything. Persons who could pay in HARD CURRENCY (DM etc.) received favorable treatment almost everywhere; in East Germany a chain of state-run stores accepting only DM was set up, at first only permitting visiting West Germans as customers, later admitting anybody (no questions asked policy).
All Eastern European countries suffered from emigration (despite the Iron Curtain); the drain of manpower was worst in East Germany, where thousands of citizens emigrated every year to West Germany (which the East German government reluctantly permitted in order to receive credits in DM, guaranteed by the FRG government). In order to fill the vacancies in East Germany's industry, workers were brought into the country from VIETNAM (c. 80,000).

With the Oil Crisis in 1973, the COMECON economy had virtually ceased to develop. The main issue had become an administrative one : hoe to manage insufficient resources and how to generate a revenue in hard currency. Few new industries emerged such as the computer industry in the GDR, which was not based on GDR research, but on industrial espionage. Necessary reforms in the structure of the economy were not undertaken, no attempts made to rise the productivity.

Many of the facilities in Poland's coal mines of Upper Silesia had not been modernized since World War I; the Elbe River was practically dead over much of its extent, as both the chemical industries of Czechoslovakia and East Germany lead their waste waters into the river. In the USSR, LAKE ARAL had shrunken to about a third of the size it used to cover, as the water of the rivers feeding it had been diverted to supply large cotton plantations. In 1986 the Soviet nuclear reactor at CHERNOBYL experienced the worst meltdown in nuclear history so far. All of these were indicators for an economy on the verge of collapse.

USSR 1964-1985 USSR 1985-1991 Poland Poland Czechoslovakia Hungary
Rumania Bulgaria East Germany

REFERENCE Article : Economic Planning, in : Britannica Book of the Year 1971 pp.284-287 (on events of 1970) [G]

This page is part of World History at KMLA
First posted on July 17th 2001, last revised on November 11th 2004

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