For a time, closing the borders and suppressing opposition of the Prague Spring allowed the Eastern bloc’s "new class" to escape the general tendency toward "westernization." In the long term, however, isolation could not be sustained. In order to keep the gap in living standards from growing still larger and to keep popular dissatisfaction below a critical threshold, the regimes of the Soviet bloc were compelled to seek credit fTom and expand trade relations with the West. Loans were to be had, however, only if the Eastern bloc were to open itself, at least partially, to exchanges of "people, ideas, and views," as Western diplomats put it at the Conference on Security and Cooperation in Europe. Additionally, Radio Free Europe and Western television, which could be received in countries close to the border between the blocs, provided continual information about conditions in the West and the Western view of things, and efforts to jam the signals were not successful.
The leaders of “real existing socialism" thereby found themselves in a dilemma: if they persisted too strongly in sealing off their societies, there would be the menace of unrest due to the backwardness of social conditions. However, if they chose the path of exchange with the West, they could be faced with the destabilization of their regimes due to Western influences. East German foreign minister Otto Winzer insightfully called the West’s policy of detente “aggression in slippers."790 Expansion of relations with the West was thus controversial within the Communist leadership. Openness was inextricably associated with the transformation of the socialist regimes, and it remained an open question as to whether this transformation could be appropriately managed. As KGB chief lurii Andropov secretly informed Willy Brandt’s adviser, Egon Bahr, in February of 1970, “You have no idea at all what is going on within the leadership [of the USSR]. You must give us time. It’s more difficult for us than for you."791
In order to evade the choice between openness and impoverishment, many of the Eastern leaders chose to focus more intensively on promoting consumption. Western credits were not invested to modernize the economy but instead were spent directly to eliminate supply bottlenecks, to raise wages, and to expand social welfare. Such a course was set by Janos Kadar in Hungary as early as 1963. In Poland, the emphasis on consumption began after the large strike movement of December 1970, which was sparked by frustration over the lack of consumer goods and the high price of foodstuffs. Again and again, party head Edward Gierek found himself having to make economic concessions to the workers that hindered the success of his modernization program. After Erich Honecker replaced Walter Ulbricht as leader of the GDR in May 1971, a social welfare and prosperity program was put in effect with the aim of preventing disruptions such as those witnessed in Czechoslovakia and Poland.
The crisis-avoidance strategy developed by Kadar, Gierek, and Honecker was only temporarily successful. Kadar became so popular that he could allow a certain amount of openness in the media and an extensive easing of repression. In the early 1970s, contemporaries spoke of “goulash communism." In Poland, where the supply of goods remained more strained, the authorities managed to hold on for another decade, until a new nationwide strike movement arose in the summer of 1980. Even after the emergence of the SolidarnoSc: movement east of the River Oder, everything remained quiet in the GDR. It was the case, however, that the Communists who emphasized prosperity had to pay for their consumer orientation with an increasing relative lag in productivity and with growing financial dependence on the West. The Soviet leadership around Leonid Brezhnev watched with growing concern as the GDR grew dependent on the steady importation of West German currency. The Soviet ambassador to the Federal Republic, Iulii Kvitsinskii, described this process with a catchy image: "Deeper and deeper, the GDR was swallowing the golden fishhook fTom which it could no longer free itself."792
The West's new approach to the Eastern bloc could be attributed to its economic prosperity. On the one hand, that prosperity was the foundation for the self-confidence required to pursue a policy of open borders and open competition. On the other, it also put Western governments in a position to provide attractive loans to the East, thereby nurturing economic ties. There was, then, a chronological as well as a causational connection between the West's transition to a consumer society and the intensification of the West's detente policy in the late 1960s and early 1970s. This corresponded with the East's increased interest in economic cooperation.
Although the end of the West's postwar boom period of high growth and full employment came in 1973-74, it changed nothing in this dynamic. The people of the West saw the recession of 1974-75 for what it was - the end of an exceptional situation that had arisen from the coincidence of postwar reconstruction, the creation of transnational institutions to promote growth and technological innovation, and low energy costs. The more modest growth rates to which people now had to become accustomed nonetheless constituted continued economic expansion. While unemployment became a chronic problem, it could be mitigated by the advanced social welfare systems now in place. Due to rigid social welfare regulations and a decline in technological innovation, Western Europe found it more difficult to compete internationally. Yet by 1979, an average GDP growth rate of 3.9 percent was once again achieved. Following another decline at the beginning of the 1980s, the level returned to 3.7 percent in 1988.793
Positive economic conditions put Western Europeans in a position to pursue their form of detente even as the Americans again embraced an agenda of isolating the East and intensifying the arms race. In December 1981, the West German chancellor, Helmut Schmidt, was able to negotiate increased travel opportunities for GDR citizens in exchange for the extension of overdraft provisions in trade between the two German states. Under his successor Helmut Kohl, West German banks offered an attractive loan of some one billion marks to the GDR in June 1983, which saved the Communist regime from looming insolvency. Further liberalization of travel followed: in 1987, some 1.2 million East Germans were allowed to visit the Federal Republic, five times as many as the previous year. The number of trips to the West by GDR citizens of retirement age rose from 1.5 million in 1986 to 3.8 million in 1987 and 6.7 million in 1988. Around 30,000 East Germans received permission to emigrate permanently each year. The foreign currency received by the East German government in exchange for permitting such emigration, and for the release of political prisoners, became an indispensable source of income.
The Eastern bloc did not suffer from the rise in energy prices during 1973-74. In fact, the opposite was true because, as net exporters of energy, the Soviet Union, Romania, and Poland profited fTom price increases. The Soviets and Romanians exploited their oil reserves more intensively, while Poland benefited from higher demand for coal. However, this source of revenue, and secret subsidies to the other states of Comecon (the East’s multinational economic organization) made possible by energy exports, could only temporarily hide the creeping exhaustion of the economies of the socialist countries. The Eastern regimes did not know how to use Western loans effectively. Even in cases where those funds were not used directly to promote consumption, there was a lack of qualified personnel and economic infrastructure to produce manufactured goods that would be competitive on the world market. Heavy industry, especially the arms industry, drained away scarce resources ofcapital and skilled labor, and the easy availability of oil and gas led to careless investment in energy-intensive sectors. Morevoer, the sluggish state economic bureaucracies did not recognize the growing importance of microcomputers and microelectronics. In 1987, there were only about 200,000 microcomputers in use in the Soviet Union, compared to some 25 million of more advanced design in the United States.794
Eventually all of the Eastern bloc countries found themselves in a debt crisis. They could not export enough competitive products to pay for their imports and service their debts. Mounting interest repayments ate away at the funds available for internal investment, thus putting a brake on growth and obliging reductions in consumption. In Poland, the first socialist country to be hit by this dilemma, the Ministry of Internal Trade acknowledged in March 1979 that some 280 products were not available in quantities sufficient to meet demand.795 Consequently, various essential consumer products were rationed. Long lines in front of shops once again became part of everyday experience, and the waiting periods for desired goods became longer and longer.
Those countries in the Third World where direct or indirect Soviet support had established leftist regimes also wound up with severe debt problems. They not only thoughtlessly accumulated large debts by borrowing petrodollars but also had to pay much higher energy prices. Their growing insolvency undermined their ambitious development goals.
At the same time, the Kremlin experienced more and more difficulty providing assistance to its friends in the southern hemisphere. The Red Army, bogged down in support of an unpopular ally in Afghanistan, engendered growing skepticism in the USSR about the efficacy and wisdom of Moscow’s other adventures in the Third World. It was hard to see that the Kremlin was gaining much from its vast expenditures in Africa, the Middle East, and Asia (as well as Cuba and Nicaragua). Instead, these commitments set back the creation of "real existing socialism" inside the Soviet Union.
World History
