Comecon - Wikipedia

Foundation

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The Comecon was founded in 1949 by the Soviet Union, Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. The primary factors in Comecon's formation appear to have been Joseph Stalin's desire to cooperate and strengthen the international relationships at an economic level with the smaller states of Central Europe,[3] and which were now, increasingly, cut off from their traditional markets and suppliers in the rest of Europe.[5] Czechoslovakia, Hungary, and Poland had remained interested in Marshall aid despite the requirements for a convertible currency and market economies. These requirements, which would inevitably have resulted in stronger economic ties to free European markets than to the Soviet Union, were not acceptable to Stalin, who, in July 1947, ordered these communist governments to pull out of the Paris Conference on the European Recovery Programme. This has been described as "the moment of truth" in the post-World War II division of Europe.[6] According to the Soviet view the "Anglo-American bloc" and "American monopolists ... whose interests had nothing in common with those of the European people" had spurned east–west collaboration within the framework agreed within the United Nations, that is, through the Economic Commission for Europe.[7]

Some say that Stalin's precise motives in establishing Comecon were "inscrutable"[8] They may well have been "more negative than positive", with Stalin "more anxious to keep other powers out of neighbouring buffer states… than to integrate them."[9] Furthermore, GATT's notion of ostensibly nondiscriminatory treatment of trade partners was thought to be incompatible with notions of socialist solidarity.[5] In any event, proposals for a customs union and economic integration of Central and Eastern Europe date back at least to the Revolutions of 1848 (although many earlier proposals had been intended to stave off the Russian and/or communist "menace")[5] and the state-to-state trading inherent in centrally planned economies required some sort of coordination: otherwise, a monopolist seller would face a monopsonist buyer, with no structure to set prices.[10]

Comecon was established at a Moscow economic conference 5-8 January 1949, at which the six founding member countries were represented; its foundation was publicly announced on 25 January; Albania joined a month later and East Germany in 1950.[8]

Recent research by the Romanian researcher Elena Dragomir suggests that Romania played a rather important role in the Comecon's creation in 1949. Dragomir argues that Romania was interested in the creation of a "system of cooperation" to improve its trade relations with the other people's democracies, especially with those able to export industrial equipment and machinery to Romania.[11] According to Dragomir, in December 1948, the Romanian leader Gheorghe Gheorghiu-Dej sent a letter to Stalin, proposing the creation of the Comecon.[12]

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At first, planning seemed to be moving along rapidly. After pushing aside Nikolai Voznesensky's technocratic, price-based approach (see further discussion below), the direction appeared to be toward a coordination of national economic plans, but with no coercive authority from Comecon itself. All decisions would require unanimous ratification, and even then governments would separately translate these into policy.[clarification needed][13] Then in summer 1950, probably unhappy with the favorable implications for the effective individual and collective sovereignty of the smaller states, Stalin "seems to have taken [Comecon's] personnel by surprise,"[clarification needed] bringing operations to a nearly complete halt, as the Soviet Union moved domestically toward autarky and internationally toward an "embassy system of meddling in other countries' affairs directly" rather than by "constitutional means"[clarification needed]. Comecon's scope was officially limited in November 1950 to "practical questions of facilitating trade."[clarification needed][14]

One important legacy of this brief period of activity was the "Sofia Principle", adopted at the August 1949 Comecon council session in Bulgaria. This radically weakened intellectual property rights, making each country's technologies available to the others for a nominal charge that did little more than cover the cost of documentation. This, naturally, benefited the less industrialized Comecon countries, and especially the technologically lagging Soviet Union, at the expense of East Germany and Czechoslovakia and, to a lesser extent, Hungary and Poland. (This principle would weaken after 1968, as it became clear that it discouraged new research—and as the Soviet Union itself began to have more marketable technologies.)[15]

In a recent paper by Faudot, Nenovsky and Marinova (2022), the functioning and the collapse of the Comecon has been studied. It focuses on the evolution of the monetary mechanisms and some technical problems of multilateral payments and the peculiarities of the transfer ruble. Comecon as an organization proved unable to develop multilateralism mainly because of issues related to domestic planning that encouraged autarky and, at best, bilateral exchanges.[16]

Nikita Khrushchev era

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After Stalin's death in 1953, Comecon again began to find its footing. In the early 1950s, all Comecon countries had adopted relatively autarkic policies; now they began again to discuss developing complementary specialties, and in 1956, ten permanent standing committees arose, intended to facilitate coordination in these matters. The Soviet Union began to trade oil for Comecon-manufactured goods. There was much discussion of coordinating five-year plans.[15]

However, once again, trouble arose. The Polish protests and Hungarian uprising led to major social and economic changes, including the 1957 abandonment of the 1956–60 Soviet five-year plan, as the Comecon governments struggled to reestablish their legitimacy and popular support.[17] The next few years saw a series of small steps toward increased trade and economic integration, including the introduction of the "transfer ruble [ru]", revised efforts at national specialization, and a 1959 charter modeled after the 1957 Treaty of Rome.[18]

Once again, efforts at transnational central planning failed. In December 1961, a council session approved the Basic Principles of the International Socialist Division of Labour, which talked of closer coordination of plans and of "concentrating production of similar products in one or several socialist countries." In November 1962, Soviet Premier Nikita Khrushchev followed this up with a call for "a common single planning organ."[19] This was resisted by Czechoslovakia, Hungary, and Poland, but most emphatically by increasingly nationalistic Romania, which strongly rejected the notion that they should specialize in agriculture.[20] In Central and Eastern Europe, only Bulgaria happily took on an assigned role (also agricultural, but in Bulgaria's case this had been the country's chosen direction even as an independent country in the 1930s).[21] Essentially, by the time the Soviet Union was calling for tight economic integration, they no longer had the power to impose it. Despite some slow headway—integration increased in petroleum, electricity, and other technical/scientific sectors – and the 1963 founding of an International Bank for Economic Co-operation, Comecon countries all increased trade with the West relatively more than with one another.[22]

Leonid Brezhnev era

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From its founding until 1967, Comecon had operated only on the basis of unanimous agreements. It had become increasingly obvious that the result was usually failure. In 1967, Comecon adopted the "interested party principle", under which any country could opt out of any project they chose, still allowing the other member states to use Comecon mechanisms to coordinate their activities. In principle, a country could still veto, but the hope was that they would typically choose just to step aside rather than either veto or be a reluctant participant.[23] This aimed, at least in part, at allowing Romania to chart its own economic course without leaving Comecon entirely or bringing it to an impasse (see de-satellization of communist Romania).[24]

Also until the late 1960s, the official term for Comecon activities was cooperation. The term integration was always avoided because of its connotations of monopolistic capitalist collusion. After the "special" council session of April 1969 and the development and adoption (in 1971) of the Comprehensive Program for the Further Extension and Improvement of Cooperation and the Further Development of Socialist Economic Integration by Comecon Member Countries, Comecon activities were officially termed integration (equalization of "differences in relative scarcities of goods and services between states through the deliberate elimination of barriers to trade and other forms of interaction"). Although such equalization had not been a pivotal point in the formation and implementation of Comecon's economic policies, improved economic integration had always been Comecon's goal.[3][25]

While such integration was to remain a goal, and while Bulgaria became yet more tightly integrated with the Soviet Union, progress in this direction was otherwise continually frustrated by the national central planning prevalent in all Comecon countries, by the increasing diversity of its members (which by this time included Mongolia and would soon include Cuba) and by the "overwhelming asymmetry" and resulting distrust between the many small member states and the Soviet "superstate" which, in 1983, "accounted for 88 percent of Comecon's territory and 60 percent of its population."[26]

In this period, there were some efforts to move away from central planning, by establishing intermediate industrial associations and combines in various countries (which were often empowered to negotiate their own international deals). However, these groupings typically proved "unwieldy, conservative, risk-averse, and bureaucratic," reproducing the problems they had been intended to solve.[27]

One economic success of the 1970s was the development of Soviet oil fields. While doubtless "(Central and) East Europeans resented having to defray some of the costs of developing the economy of their hated overlord and oppressor,"[28] they benefited from low prices for fuel and other mineral products. As a result, Comecon economies generally showed strong growth in the mid-1970s. They were largely unaffected by the 1973 oil crisis.[27] Another short-term economic gain in this period was that détente brought opportunities for investment and technology transfers from the West. This also led to an importation of Western cultural attitudes, especially in Central Europe. However, many undertakings based on Western technology were less than successful (for example, Poland's Ursus tractor factory did not do well with technology licensed from Massey Ferguson); other investment was wasted on luxuries for the party elite, and most Comecon countries ended up indebted to the West when capital flows died out as détente faded in the late 1970s, and from 1979 to 1983, all of Comecon experienced a recession from which (with the possible exceptions of East Germany and Bulgaria) they never recovered in the Communist era. Romania and Poland experienced major declines in the standard of living.[29]

Perestroika

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The 1985 Comprehensive Program for Scientific and Technical Progress and the rise to power of Soviet general secretary Mikhail Gorbachev increased Soviet influence in Comecon operations and led to attempts to give Comecon some degree of supranational authority. The Comprehensive Program for Scientific and Technical Progress was designed to improve economic cooperation through the development of a more efficient and interconnected scientific and technical base.[3] This was the era of perestroika ("restructuring"), the last attempt to put the Comecon economies on a sound economic footing.[30] Gorbachev and his economic mentor Abel Aganbegyan hoped to make "revolutionary changes" in the economy, foreseeing that "science will increasingly become a 'direct productive force', as Marx foresaw… By the year 2000… the renewal of plant and machinery… will be running at 6 percent or more per year."[31]

The program was not a success. "The Gorbachev regime made too many commitments on too many fronts, thereby overstretching and overheating the Soviet economy. Bottlenecks and shortages were not relieved but exacerbated, while the (Central and) East European members of Comecon resented being asked to contribute scarce capital to projects that were chiefly of interest to the Soviet Union…"[32] Furthermore, the liberalization that by 25 June 1988, allowed Comecon countries to negotiate trade treaties directly with the European Community (the renamed EEC), and the "Sinatra doctrine" under which the Soviet Union allowed that change would be the exclusive affair of each individual country marked the beginning of the end for Comecon. Although the Revolutions of 1989 did not formally end Comecon, and the Soviet government itself lasted until 1991, the March 1990 meeting in Prague was little more than a formality, discussing the coordination of non-existent five-year plans. From 1 January 1991, the countries shifted their dealings with one another to a hard currency market basis. The result was a radical decrease in trade with one another, as "(Central and) Eastern Europe… exchanged asymmetrical trade dependence on the Soviet Union for an equally asymmetrical commercial dependence on the European Community."[33]

The final Comecon council session took place on 28 June 1991, in Budapest, and led to an agreement to dissolve in 90 days.[34] The Soviet Union was dissolved on 26 December 1991.

Post-Cold War activity after Comecon

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After the fall of the Soviet Union and communist rule in Eastern Europe, East Germany (now unified with West Germany) automatically joined the European Union (then the European Community) in 1990. The Baltic States (Estonia, Latvia and Lithuania), Czech Republic, Hungary, Poland, Slovakia, and Slovenia joined the EU in 2004, followed by Bulgaria and Romania in 2007 and Croatia in 2013. To date, Czechia, Estonia, Germany (former GDR), Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia are now members of the Organisation for Economic Co-operation and Development. All four Central European states are now members of the Visegrád Group.

Russia, the successor to the Soviet Union, along with Ukraine and Belarus founded the Commonwealth of Independent States which consists of most of the ex-Soviet republics. The country also leads the Shanghai Cooperation Organisation with Kazakhstan, Kyrgyzstan and Uzbekistan and the Eurasian Economic Union with Armenia, Belarus, Kazakhstan and Kyrgyzstan. Along with Ukraine, Georgia, Azerbaijan and Moldova are also part of the GUAM.

Vietnam and Laos joined the Association of Southeast Asian Nations (ASEAN) in 1995 and 1997 respectively.