"Although it is impossible precisely to evaluate the gains and losses in intra-Comecon trade it is generally agreed that the USSR was subsidizing Eastern Europe and that over time this subsidy was rising largely because of the growing opportunity costs involved in supplying the group with 'hard' commodities such as oil. Up to the mid-1970s the Soviet Union was apparently willing to pay this price in return for politically stable and loyal allies; up to the 1973 oil-price explosion the only way in which the subsidy was reduced was the Soviet insistence that East European countries contribute to the development of its resources. During the 1970s, however, it became clear that the terms of trade of 'hard' goods would continue to rise and that East European countries would not be able to reduce the subsidy for the following two reasons: first, because they incurred, in some cases considerable, convertible currency debts so their ability to buy oil in non-Comecon markets was severely restricted, and secondly, the imports of Western technology initially undertaken in the hope that the 'softness' of East European manufactures would be reduced did not result in a direct improvement (and could, as in the case of Poland, lead to severe strain and eventual collapse). On the other hand, the USSR is in no position to continue to subsidize Eastern Europe indefinitely. There are several reasons for this. First, the Soviet economic growth has declined to unprecedently low rates; secondly, the oil industry is experiencing difficulties in securing adequate supplies for the 1980s; thirdly, the Soviet Union is forced to continue to spend substantial hard currency outlays on the import of grain; and fourthly, it undertook to subsidize the developing members of Comecon--Cuba, Mongolia and most recently Vietnam."
(Vladimir Sobell, "The Red Market : Industrial Co-operation and Specialisation in Comecon" (Aldershot, 1984) _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
