The Collapse of the Soviet Union: EXPLAINED
On a very symbolic day, Christmas 1991, the flag of the Soviet Union was pulled down from the Kremlin's flagpole once and for all. It was the end of an era that had lasted almost 70 years. That evening pretty much every tv news broadcasted live the resignation speech of the last secretary of the Soviet Communist Party: Mikhail Gorbachev.
The first international reaction was that of the US President George Bush Senior who, for three times, described the event as America's definitive victory over communism. However, the question that many asked themselves at the time was: how had it been possible to get to that point? The collapse of the Soviet Union was a sequence of causes. Internal and external, old and rotten, all typical causes of a crippled system, magnified by a sequence of major errors.
To discuss the collapse we must go back a few years earlier, to November 1982. Gorbachev wasn't yet the General Secretary of the Communist Party. That role was held by Jurij Andropov. To be honest, the idea of "restructuring" the Soviet Union did not start with Gorbachev. But with Andropov.
Many in Russia were saying: if only Andropov had lived a little longer, the USSR would have survived. Well, when he was appointed by Brezhnev as his successor, Andropov was aware that he was inheriting a Soviet Union full of problems. By 1982, the Soviets were at war with Afghanistan, détente with the West had failed, and Reagan - an anti-communist champion - had ascended to the White House. In Eastern Europe, things weren't any better: in Poland, workers were demanding a decrease in food prices and, with the help of dissident intellectuals, they had founded a movement of revolt, Solidarity, which in the early eighties already had millions of members. The problems, however, were not "fresh" ones: the USSR had many open questions since its foundation, and one of these can be ascribed to one single word: historical instability. Since the time of the Revolution, Socialism in Russia claimed to be able to modernize a nation that, unlike Western Europe, was still trapped in economic and political chaos.
It was like playing a strategy video game: pick the USSR and you get a starting handicap compared to other Western nations. This starting handicap generated an immature and unripe condition for the communists in power, which made them force the stages of a modernization process that had taken centuries in the West. To put it in even more basic terms that will piss off any chef living in Italy, they wanted to make pasta by boiling it in still lukewarm water. For some, the Soviet Union was created on unstable foundations: an economy torn apart by the incapacity of the imperial government, working classes that were really still underdeveloped and the absence of really decisive cultural movements.
This condition of intrinsic failings of the system, would persist throughout the whole Soviet history. Sure, with Stalin, heavy industrialization and increased centralization brought changes in the economy, they were a decisive impulse to transform the Soviet Union into a nation no longer backward, the second most industrial nation in the world, yet the latent problems didn't disappear, they only festered: the majority population were no longer peasants but workers. Goodbye, Kulaks. And with both Stalin and his successors Krushev and Brezhnev, the economy was dictated by a single key word: intensity...
when in fact the Soviets needed the opposite, extensivity. I’m not sure if this word exists in English. To beat the West, the USSR adopted the mantra of quantity over quality. Although far from the American model, the Soviet one would always be based on a "Fordist" conception, let's say, where almost everyone ended up in a factory working to contribute to the huge production of materials, first for war and then for civilian use.
And it remained so, even when in the rest of the Western world, in the 80s, the arrival of a new technology began to be foreseen: information technology. As promoters of a socialist model, the big problem of the Soviets was being immediately subjected to a very strong political isolation and economic embargoes by that advanced part of the world, the West. The Soviet Union was indeed autonomous, but ended up being a separate universe on its own. In the 80's, Andropov was the first to realize that in order to modernize the Soviet economy there were a need for money and knowledge that was abundant in the West. This idea obviously didn’t diminish the value and the quality of many Soviet scientists, but it rather diminished the immobility that for decades marked the Communist Party.
As Andropov confessed in 1981 to Erich Mielke, head of the Stasi - the East German secret service: "The Americans seem to have unlimited money". Andropov had a point: NATO, Japan and the Arab states of the Gulf contributed to financing the American debt and its state funds, including military spending; on the other hand, the Soviet Union had a whole series of socialist states that depended exclusively on subsidies from Mother Moscow. The isolation of the socialist countries had contributed to making it clear to everyone that it was capitalism that was dictating the rules of the game, and the fact that with détente in the 1970s the Soviet Union had taken up the idea of opening a dialogue with the United States, and thus knocking on the door of those who controlled the capitalist market, was - to use the words of Eric Hobsbawm - the beginning of the end. The first signs of weakness in the Soviet Union appeared in 1979, when the international markets were hit by a very serious oil crisis.
The wave fell with all its power on the Soviet budgets that relied heavily on the export of gas and crude oil. The USSR was in fact the first oil producing nation, with more than eleven million barrels per day). But it was another energy crisis that messed up the game, not that of 79 but that of 73. In that year, a West without oil decided to renew itself technically and scientifically so to make itself less dependent on crude oil exporting countries and at the same time find new ways of earning money; Russia, instead, was satisfied to export oil to Western countries and had no incentive to innovate itself. At a meeting in 1982 Andropov denounced a very disturbing fact: the Soviets were importing more and more food such as grain and meat from foreign countries. Andropov said "I don't wanna alarm you," "but," he continued, "in the last few years we have wasted billions of rubles.
Strong words, strong words from a strange man, though in reality he was right, because instead of using oil revenues to invest them in technology and knowledge for development, the Soviet Union used them to do what it should not do: import food - that it could produce very well by itself - and give subsidies to its puppet states. The United States did nothing but say thanks. With the oil crisis in 79, the Russians found themselves with no money left to pay for food imports.
At that point what did they do? They started borrowing money from Western foreigners themselves. The first to experience the mechanism of debt on their own skin were the countries of Eastern Europe, the Baltics but especially Romania, Poland and Hungary, where the need to repay foreign debt increased social unrest, which, in turn, led to popular uprisings that slowly brought Eastern Europe away from Soviet control. The first countries to incur debts with the International Monetary Fund were Yugoslavia, which was no longer aligned with Moscow, and then it was the turn of the friends in the Warsaw Pact. Already in 1970 Moscow found itself surrounded by satellite states with negative budgets and with pockets full of debts with the West. When a group of dissidents created Solidarnosc in Poland in 1980, Andropov became aware of one thing: the inability to intervene militarily as USSR had done with Czechoslovakia in 1968.
Moreover, the underlying problem wasn't tangible, the problem was the absence of money. As pointed out by historian Vladislav Zubok: Poland had accumulated $27 billion in debt to Western banks at very high interest rates and, for its part, the Soviets did not have the capital to repay the debts of the Poles. The Russians were well aware of the implications of this: their own satellite states had become the weak links that risked blowing up COMECON, the economic alliance within the Union republics. In an investigation by Carl Bernstein, a journalist known for having contributed to the unraveling of the Watergate scandal in America, it was reported that Solidarnosc was nothing more than a tool in the hands of the United States and financed by the italian bank Banco Ambrosiano – in connection with the Vatican - to undermine the USSR from within.
Nothing new on the Western front: Actually the exact quote from the book is “All quiet on the Western Front”. it's just that in Italian we say that way and I translated it literally. Mamma mia. the Vatican hoped to take root not only in the very religious Poland but also in the rest of Eastern Europe; and the United States, well, needless to say: they wanted to win the race. As Bernestein reported, the U.S. embassy in the Polish capital of Warsaw had in fact become the CIA headquarters on the other side of the Iron Curtain.
Undoubtedly, in Poland there were already discontents, the citizens were very suffering, otherwise it would have been impossible for the western secret services to create such massive riots out of nothing. The use secret services was common on both sides; nuclear weapons forced to act in the background. And speaking of nuclear armaments, there are those who say that the arms race and the military spending budget contributed to the Soviet imbalance. According to Mark Harrison, professor and expert in Economic History, it was not military spending that endangered the Soviet economy. In terms of numbers, the active personnel in the Soviet Union in the 80's amounted to more than 5 million and 12% of the GDP was dedicated to the budget for the war industry; in comparison, the maximum that the United States had done was in 1963, when they allocated 9% of GDP. The United States, having a greater number of allies at its disposal and therefore more resources to draw on, could tolerate with more ease this competition which, at the end was aimed at frantically bleeding the Soviet coffers, something that the Secretary of State George Schulz himself would later admit.
In the 80's, when Reagan threated the USSR with the installation of the Euro missiles, the Soviets had to intensify their efforts by running after advanced technologies and creating an arsenal of more than 6000 nuclear warheads, a huge strain for the weak Soviet economy that generated irreparable imbalances. In fact, since Stalin took the leadership, the Soviet economy had been based on a state of permanent war and neurosis, and this had pushed the Russians to prefer heavy industry - first of all war and industrial machineries - at the expense of consumer goods. And as if that weren't enough, despite Kosygin's unsuccessful attempts to reform the economy in the 1960s, Soviet planning - which was centralized and state-based - had serious cracks in it: false and inaccurate information, inflated production costs, excess materials produced without accounting for the real quantities needed, low labor productivity, low rhythms, absenteeism, and poorly exploited labor. All this only widened the gap with the overly competitive capitalist world. If you were a Soviet worker, whether you worked hard 10 hours a day or not, that salary always came. So why make an unnecessary effort? The same happened with the salaries of all the professions (from doctors to engineers) which, since Krushov in the 60's, had been fixed at a predetermined ceiling beyond which they rarely went.
It is logical that without the possibility of economic progress, one does not have the incentive to get better. Practical examples such as these generated over the decades a loss of confidence in socialism by the Soviets. In the 1970s and 1980s in Russia, as reported by historian Zaslavsky, workers were passive, indifferent, lacking ideals and driven by purely consumerist behavior, a pessimism also intensified by the failure of the invasion of Afghanistan. Society had entered a labyrinth of economic and social crises. The same Soviet companies, subsidized by the State, did not aim at technological innovation and investment, because nothing would change. In a nation where little food, few medicines, few clothes or household appliances were produced, things were bound to get jammed up.
With the crisis of 1979, the distribution of essential supplies became more and more complex. When, under Gorbachev at the end of the 1980s, food prices conformed to those of the Western free market, the damage was complete and empty shelves in supermarkets became the norm in Russia. Another internal issue that had been building up since the Fifties in the Soviet Union then deepened the crisis of essential goods.
The Double Economy. Today we would call it "the black economy", a shadow economy, parallel to the state economy and composed of transactions that went under the scanner of the Soviet bureaucracy. In short, the Double Economy deprived the State of revenue, making it flow into the black market. Goods such as cars, for which there were very long waiting lists, were an excellent opportunity on which many bureaucrats speculated, by reselling them on the black market at very high prices. This involved any item: furniture, spare parts, clothes and even houses construction. The black market meant that, in addition to money, materials and labor were being stolen from the state.
Over time, all over the USSR - especially the areas most remote from Moscow - an underworld of businessmen - whom the historian Zubok calls pseudo-capitalists - had formed. These were real entrepreneurs with money, materials and workers. They contolled all of this under the table to raise more money and earn more than the standard salary offered by the State. Konstantin Simis in his book "The Secret World of Soviet Capitalism" states: "Under the socialist surface lies a network of private companies. Thousands of them produce sweaters, shoes, sunglasses, cassettes with Western pop music, handbags and many other goods. The owners are both small businessmen and multimillionaire family clans holding dozens of companies."
When Gorbachev came to power in '85, no politician or bureaucrat was exempt from this under-the-table trafficking. The underground economy, which in the 60's was equivalent to 3% of the national economy, in the 90's in the Soviet Union reached 13%. Prostitution and drugs also contributed to a large part of the Soviet underground economy. It was in this illegality that corruption and the Mafias found very fertile ground. Already in 1974, among the highest Party officials, the Moscow Mafia had profitable business relations.
With the fierce privatizations in the early 90's the Russian Mafia found a real treasure; that was the period when organized crime became the true master of the streets, the dispenser of death and violence for millions of Russians who fell into the Abìss of drug addiction. . And unlike his predecessors who at least tried to hide things, Gorbachev instilled the idea of a lost war; he was the first to say in his speeches that capitalism won, and communism didn't. Attitude of a true leader. Many blamed the Soviet nomenklatura and bureaucracy who enjoyed special privileges and lived as if they were a class of their own. State inertia, excessive bureaucratization and the indifference of Party members had created a huge gap between citizens and politics. The politicians themselves were so old that they were referred to as a "gerontocracy," a government of elders bloated by nepotism and cronyism.
And clearly when the old guys are in power, all gathered into one party, they only care about keeping that power until they die. What about improving the economy? Pff who damn cares? In the Soviet Union there were two nomenklatures: the political-administrative one, which permeated the single Party in Moscow, and the economic one made up of military, intellectuals and business managers. That the two sides were separated was not a good thing. Because when the central state - hence the bureaucrats in Moscow - increasingly weakened by the scarcity of money and consumer goods began to lose relevance and influence in the country, the power passed more and more into the hands of the economic nomenklatura, that is those who actually held the real resources of the country: directors who managed industries, estates and mines, the same ones who later, with the fierce sell-off of the best national companies, would turn into multi-billionaire oligarchs.
In the liberal years of Gorbachev, the "economic nomenklatura" chose to play with intelligence, opening private companies and joint ventures with Western partners, by giving them valuable information previously kept by party bureaucrats. And that wasn’t all: they also offered most of their resources that the Soviet Union enjoyed in abundance, such as oil and gas. Everything officially started with the famous Perestrojka, literally "the reconstruction". Perestroika proved one thing: that the breakup of the USSR, before Gorbachev, was not a foregone conclusion. Gorbachev - who is still alive and is 90 years old - has yet to be fully analysed by historians. For the moment I will always remember him for his awkward commercial [...] Essentially
with that appearance which was paid 1 million dollars, Gorby implicitly admitted in front of everyone that consumerism was superior to the ideology of its own party. The funny thing was that Gorbachev always invoked Lenin's name in his rallies, he considered him a mentor, but perestroika, initially presented as something revolutionary, ended up becoming the opposite, the dismantling of the whole system. The slogan was "acceleration", recovering the gap with the West. But in order to do so, Gorbachev implemented his reforms on the basis of two conditions that would have got Lenin's hair fall - at least the remaining ones: de-statalization, i'm not sure if this word exists in English, and privatization.
According to some historians, Gorbachev acted consciously, he wanted to dismantle the Soviet system piece by piece, to embrace the dogmas of economic liberalism, deceived by the benefits of economic exchange with the West. For others, Gorbachev was simply an idiot who had no idea how to lead a country. He instead admitted that he was convinced that it wasn’t possible to reform the country without first dismantling it, making it transparent and free from the maniacal control of state censorship, hence the concept of Glasnost'. Glasnost was in fact the sounding board of the disaster of perestroika, because the media began to talk about those problems in Russia that were under the eyes of all but no one could mention: alcoholism, lack of food and crumbling housing. And speaking of alcohol: the drinking habit of Russians is well known, to the point of being a social plague. Gorbachev thought it was time to eradicate the problem by implementing an anti-alcohol policy.
The catch was, however, that alcohol taxes guaranteed the state a sum of about six hundred and sixty-six million dollars. However, the Gosplan, the State Planning Committee - under pressure from Gorbachev himself - cut off that source of revenue, raising drink prices and prosecuting those caught in a... well, miserable state. Nonetheless, the ban didn't take into account a detail: the black market. The vodka that became a luxury good ended up again "m3rachiulusly" resold through the back door.
The financial disaster was quick to come: sales of vodka dropped from 54 billion rubles in 1984 to 11 billion in 1986. In Gorbachev's mind, however, there were no issues: this is it, in 5 years we'll heal USSR. Gorbachev reasoned by taking as a model what happened in the 30s: at that time, the USSR had begun to modernize thanks to the construction of industries and plants erected by Western companies that, on commission, had also trained Soviet engineers and workers from scratch.
One example above all was the American architect Albert Kahn, who joined the Kremlin's consulting team for the construction of more than five hundred industrial plants; another example was the General Electric, which oversaw the construction of the hydroelectric power plant on the Dniepr River. Instead, Gorbachev's mistake was to channel money into existing state enterprises, not to create new ones. The old leaders were conservative, unwilling to innovate. And that's why much of the equipment that had been purchased in the West was never used in the old plants. Brilliant.
Anyway, whatever plans Gorbachev and his team of economists had for the long term... well, the Chernobyl nuclear disaster in April 86 erased them altogether. The flight of hundreds of thousands of people from the surrounding areas evoked scenarios from World War II. According to the head of the economic department Nikolai Ryzhkov, the cost of the Chernobyl disaster for the first month alone was 8 billion rubles. To paraphrase Ryzhkov, Chernobyl delivered a devastating blow to the Soviet economy.
People began to whisper that it was the " tainted leader", Gorbachev, to bring bad luck... he was called in that disdainful way because of the visible spot on his forehead. Gorbachev did not make himself very popular, as he kept the entire Russian population in the dark about the disaster for many days.
Apart from Chernobyl, Gorbachev went on with his Perestroika, and what were the results? Terrible. Perestroika liberalized overnight a Soviet economy that was planned from the beginning, it was a devastating blow. First, government officials approved the creation of "free" prices, no longer controlled and set by the state. Only 4% of the citizens approved this maneuver.
The result? A race to the top of basic necessities and a hyperinflation that in 1992 would have touched peaks of Two Thousand Six Hundred %. Money was rationed and in its place a sort of "consumer card" was introduced, they were sheets of paper worth various amounts of rubles, with which citizens could make purchases without using cash money. When they found a piece of bread after hours standing in line, Russians could count themselves lucky if they could buy a half-pound loaf of bread for 6 dollars, compared to an average monthly salary of fifty dollars. Although the Soviet standard of living until then had always been at least a third lower than that of Westerners, citizens noticed the difference with respect to previous times: crime, especially the mafia, was lower and there was a general sense of greater security. Whether this was real or not is another story. With Perestroika there was a free-for-all for those who wanted to do business with large foreign multinationals, an incentive from which stemmed a whole series of speculation and fake sales, like the ones of the strategic Soviet mining companies at symbolic prices.
On top of that, there was the Issuance of new currencies for all the republics of the Union. This increased the confusion of internal transactions and trade. In addition, the so-called "property law" of 1990, which removed the state from ownership of key industries, generated 2 million unemployed nationwide, a figure never seen before.
And as we know, an unemployed population use more and more alcohol and drugs, to say the least. By 98, the Russian economy, in the hands of mobsters and foreign entrepreneurs, would have been almost completely halved from 1990 figures, going from a GDP of five hundred and ten billion to a GDP of two hundred and seventy. Food prices had doubled, and wages were less than half. While, typhoid, cholera and other diseases had reached epidemic proportions in the country. It was as if the entire nation had suddenly gone back 80 years. Some, such as historian Stephen Cohen, have called this achievement the result of a particular phenomenon, Gangster Capitalism.
The opening up to international markets also encouraged the arrival of private banks, which replaced the monopoly of the State Bank. Soviet debt to Western banks jumped from twenty seven point two billion dollars in 1985 to forty billion $ in 1986. Wanting to reform things too quickly also invested the political front. Gorbachev knew that the Party - and its members - were the operational core. If he wanted to change the Union structure, the only way was to strip Party members of their various Departments and deprive them of their powers.
With a series of reforms Gorbachev did just that, he took away the Party's decision-making monopoly. In doing so, however, it was like beheading the State, it was a political suicide, in all respects. Without a head - the State - the body (the Soviet Union) suddenly stopped working, a bit like unplugging a device.
At that point, all it took was a little push, an international event of great impact that could maybe break up the entire Eastern bloc. Oh, yeah, how silly, this already happened in 1989: --- With the symbolic fall of the Berlin Wall, like a domino, all the Soviet republics, starting with the Baltic ones, broke away one after the other in the wake of the independence euphoria that horrified the Russian nationalists. And nationalism was the final card, the ace of spades that would close the game. The first to realize that the rules of that game were changing, was Boris Yeltsin.
Like an old fox, Yeltsin exploited the frustrations of the most radical communists and some of the members of the secret service to break away from Gorbachev's wing, dress up as a populist leader, go into opposition, and support a coup against Gorbachev in 1991 in the capital Moscow. The images of him getting on the tank would go around the world, angering the most dissatisfied people who were fed up with Gorbachev's policies. The coup failed immediately, because obviously there was no longer a state. It must be said that 70% of the population wanted to maintain the Soviet Union, the referendum on the preservation of the USSR in 1991 clearly demonstrated this. But these were not Yeltsin's plans. Yeltsin had all the popular support to be able to obscure Gorbachev, take away his remaining consensus and force him to resign at the end of August.
In November of the same year Yeltsin would issue a decree with which to make illegal any activity of the Communist Party and dissolve once and for all the Soviet State. On December 11, 1991 only two of the 15 Soviet republics were still part of the Union: Russia and Kazakhstan. The former left the Union the following day, on December 12. That was the end of the USSR and the beginning of the Russian Federation.
[gentlemen titanic]. It’s not over yet. With the exit of Russia, Kazakhstan became the Soviet Union. Yep. For 4 days, until it declared itself an independent republic on December 16, 1991, Kazakhstan was basically the Soviet Union. Oh great Kazakhstan, thank you, you created a nightmare that even Lenin would never have dared to dream.
I've been wanting to make this video for almost a year, I tried 3 times previously but I always gave up. Summarizing the reasons for the collapse of the Soviet Union in a 30 minutes video was unthinkable. Yet here we are. Thanks to all of you for listening to me until the end. See you in the next episode. Ciao! On a very symbolic day, Christmas 1991, the flag of the Soviet Union was pulled down from the Kremlin's flagpole once and for all.
It was the end of an era that had lasted almost 70 years. That evening pretty much every tv news broadcasted live the resignation speech of the last secretary of the Soviet Communist Party: Mikhail Gorbachev. The first international reaction was that of the US President George Bush Senior who, for three times, described the event as America's definitive victory over communism.
However, the question that many asked themselves at the time was: how had it been possible to get to that point? The collapse of the Soviet Union was a sequence of causes. Internal and external, old and rotten, all typical causes of a crippled system, magnified by a sequence of major errors. To discuss the collapse we must go back a few years earlier, to November 1982. Gorbachev wasn't yet the General Secretary of the Communist Party. That role was held by Jurij Andropov. To be honest, the idea of "restructuring" the Soviet Union did not start with Gorbachev.
But with Andropov. Many in Russia were saying: if only Andropov had lived a little longer, the USSR would have survived. Well, when he was appointed by Brezhnev as his successor, Andropov was aware that he was inheriting a Soviet Union full of problems.
By 1982, the Soviets were at war with Afghanistan, détente with the West had failed, and Reagan - an anti-communist champion - had ascended to the White House. In Eastern Europe, things weren't any better: in Poland, workers were demanding a decrease in food prices and, with the help of dissident intellectuals, they had founded a movement of revolt, Solidarity, which in the early eighties already had millions of members. The problems, however, were not "fresh" ones: the USSR had many open questions since its foundation, and one of these can be ascribed to one single word: historical instability. Since the time of the Revolution, Socialism in Russia claimed to be able to modernize a nation that, unlike Western Europe, was still trapped in economic and political chaos. It was like playing a strategy video game: pick the USSR and you get a starting handicap compared to other Western nations. This starting handicap generated an immature and unripe condition for the communists in power, which made them force the stages of a modernization process that had taken centuries in the West.
To put it in even more basic terms that will piss off any chef living in Italy, they wanted to make pasta by boiling it in still lukewarm water. For some, the Soviet Union was created on unstable foundations: an economy torn apart by the incapacity of the imperial government, working classes that were really still underdeveloped and the absence of really decisive cultural movements. This condition of intrinsic failings of the system, would persist throughout the whole Soviet history.
Sure, with Stalin, heavy industrialization and increased centralization brought changes in the economy, they were a decisive impulse to transform the Soviet Union into a nation no longer backward, the second most industrial nation in the world, yet the latent problems didn't disappear, they only festered: the majority population were no longer peasants but workers. Goodbye, Kulaks. And with both Stalin and his successors Krushev and Brezhnev, the economy was dictated by a single key word: intensity... when in fact the Soviets needed the opposite, extensivity. I’m not sure if this word exists in English.
To beat the West, the USSR adopted the mantra of quantity over quality. Although far from the American model, the Soviet one would always be based on a "Fordist" conception, let's say, where almost everyone ended up in a factory working to contribute to the huge production of materials, first for war and then for civilian use. And it remained so, even when in the rest of the Western world, in the 80s, the arrival of a new technology began to be foreseen: information technology.
As promoters of a socialist model, the big problem of the Soviets was being immediately subjected to a very strong political isolation and economic embargoes by that advanced part of the world, the West. The Soviet Union was indeed autonomous, but ended up being a separate universe on its own. In the 80's, Andropov was the first to realize that in order to modernize the Soviet economy there were a need for money and knowledge that was abundant in the West. This idea obviously didn’t diminish the value and the quality of many Soviet scientists, but it rather diminished the immobility that for decades marked the Communist Party. As Andropov confessed in 1981 to Erich Mielke, head of the Stasi - the East German secret service: "The Americans seem to have unlimited money". Andropov had a point: NATO, Japan and the Arab states of the Gulf contributed to financing the American debt and its state funds, including military spending; on the other hand, the Soviet Union had a whole series of socialist states that depended exclusively on subsidies from Mother Moscow.
The isolation of the socialist countries had contributed to making it clear to everyone that it was capitalism that was dictating the rules of the game, and the fact that with détente in the 1970s the Soviet Union had taken up the idea of opening a dialogue with the United States, and thus knocking on the door of those who controlled the capitalist market, was - to use the words of Eric Hobsbawm - the beginning of the end. The first signs of weakness in the Soviet Union appeared in 1979, when the international markets were hit by a very serious oil crisis. The wave fell with all its power on the Soviet budgets that relied heavily on the export of gas and crude oil. The USSR was in fact the first oil producing nation, with more than eleven million barrels per day).
But it was another energy crisis that messed up the game, not that of 79 but that of 73. In that year, a West without oil decided to renew itself technically and scientifically so to make itself less dependent on crude oil exporting countries and at the same time find new ways of earning money; Russia, instead, was satisfied to export oil to Western countries and had no incentive to innovate itself. At a meeting in 1982 Andropov denounced a very disturbing fact: the Soviets were importing more and more food such as grain and meat from foreign countries. Andropov said "I don't wanna alarm you," "but," he continued, "in the last few years we have wasted billions of rubles. Strong words, strong words from a strange man, though in reality he was right, because instead of using oil revenues to invest them in technology and knowledge for development, the Soviet Union used them to do what it should not do: import food - that it could produce very well by itself - and give subsidies to its puppet states. The United States did nothing but say thanks.
With the oil crisis in 79, the Russians found themselves with no money left to pay for food imports. At that point what did they do? They started borrowing money from Western foreigners themselves. The first to experience the mechanism of debt on their own skin were the countries of Eastern Europe, the Baltics but especially Romania, Poland and Hungary, where the need to repay foreign debt increased social unrest, which, in turn, led to popular uprisings that slowly brought Eastern Europe away from Soviet control. The first countries to incur debts with the International Monetary Fund were Yugoslavia, which was no longer aligned with Moscow, and then it was the turn of the friends in the Warsaw Pact. Already in 1970 Moscow found itself surrounded by satellite states with negative budgets and with pockets full of debts with the West. When a group of dissidents created Solidarnosc in Poland in 1980, Andropov became aware of one thing: the inability to intervene militarily as USSR had done with Czechoslovakia in 1968.
Moreover, the underlying problem wasn't tangible, the problem was the absence of money. As pointed out by historian Vladislav Zubok: Poland had accumulated $27 billion in debt to Western banks at very high interest rates and, for its part, the Soviets did not have the capital to repay the debts of the Poles. The Russians were well aware of the implications of this: their own satellite states had become the weak links that risked blowing up COMECON, the economic alliance within the Union republics. In an investigation by Carl Bernstein, a journalist known for having contributed to the unraveling of the Watergate scandal in America, it was reported that Solidarnosc was nothing more than a tool in the hands of the United States and financed by the italian bank Banco Ambrosiano – in connection with the Vatican - to undermine the USSR from within.
Nothing new on the Western front: Actually the exact quote from the book is “All quiet on the Western Front”. it's just that in Italian we say that way and I translated it literally. Mamma mia. the Vatican hoped to take root not only in the very religious Poland but also in the rest of Eastern Europe; and the United States, well, needless to say: they wanted to win the race. As Bernestein reported, the U.S. embassy in the Polish capital of Warsaw had in fact become
the CIA headquarters on the other side of the Iron Curtain. Undoubtedly, in Poland there were already discontents, the citizens were very suffering, otherwise it would have been impossible for the western secret services to create such massive riots out of nothing. The use secret services was common on both sides; nuclear weapons forced to act in the background. And speaking of nuclear armaments, there are those who say that the arms race and the military spending budget contributed to the Soviet imbalance. According to Mark Harrison, professor and expert in Economic History, it was not military spending that endangered the Soviet economy. In terms of numbers, the active personnel in the Soviet Union in the 80's amounted to more than 5 million and 12% of the GDP was dedicated to the budget for the war industry; in comparison, the maximum that the United States had done was in 1963, when they allocated 9% of GDP.
The United States, having a greater number of allies at its disposal and therefore more resources to draw on, could tolerate with more ease this competition which, at the end was aimed at frantically bleeding the Soviet coffers, something that the Secretary of State George Schulz himself would later admit. In the 80's, when Reagan threated the USSR with the installation of the Euro missiles, the Soviets had to intensify their efforts by running after advanced technologies and creating an arsenal of more than 6000 nuclear warheads, a huge strain for the weak Soviet economy that generated irreparable imbalances. In fact, since Stalin took the leadership, the Soviet economy had been based on a state of permanent war and neurosis, and this had pushed the Russians to prefer heavy industry - first of all war and industrial machineries - at the expense of consumer goods. And as if that weren't enough, despite Kosygin's unsuccessful attempts to reform the economy in the 1960s, Soviet planning - which was centralized and state-based - had serious cracks in it: false and inaccurate information, inflated production costs, excess materials produced without accounting for the real quantities needed, low labor productivity, low rhythms, absenteeism, and poorly exploited labor. All this only widened the gap with the overly competitive capitalist world. If you were a Soviet worker, whether you worked hard 10 hours a day or not, that salary always came.
So why make an unnecessary effort? The same happened with the salaries of all the professions (from doctors to engineers) which, since Krushov in the 60's, had been fixed at a predetermined ceiling beyond which they rarely went. It is logical that without the possibility of economic progress, one does not have the incentive to get better. Practical examples such as these generated over the decades a loss of confidence in socialism by the Soviets. In the 1970s and 1980s in Russia, as reported by historian Zaslavsky, workers were passive, indifferent, lacking ideals and driven by purely consumerist behavior, a pessimism also intensified by the failure of the invasion of Afghanistan. Society had entered a labyrinth of economic and social crises.
The same Soviet companies, subsidized by the State, did not aim at technological innovation and investment, because nothing would change. In a nation where little food, few medicines, few clothes or household appliances were produced, things were bound to get jammed up. With the crisis of 1979, the distribution of essential supplies became more and more complex. When, under Gorbachev at the end of the 1980s, food prices conformed to those of the Western free market, the damage was complete and empty shelves in supermarkets became the norm in Russia.
Another internal issue that had been building up since the Fifties in the Soviet Union then deepened the crisis of essential goods. The Double Economy. Today we would call it "the black economy", a shadow economy, parallel to the state economy and composed of transactions that went under the scanner of the Soviet bureaucracy. In short, the Double Economy deprived the State of revenue, making it flow into the black market.
Goods such as cars, for which there were very long waiting lists, were an excellent opportunity on which many bureaucrats speculated, by reselling them on the black market at very high prices. This involved any item: furniture, spare parts, clothes and even houses construction. The black market meant that, in addition to money, materials and labor were being stolen from the state.
Over time, all over the USSR - especially the areas most remote from Moscow - an underworld of businessmen - whom the historian Zubok calls pseudo-capitalists - had formed. These were real entrepreneurs with money, materials and workers. They contolled all of this under the table to raise more money and earn more than the standard salary offered by the State. Konstantin Simis in his book "The Secret World of Soviet Capitalism" states: "Under the socialist surface lies a network of private companies. Thousands of them produce sweaters, shoes, sunglasses, cassettes with Western pop music, handbags and many other goods. The owners are both small businessmen and multimillionaire family clans holding dozens of companies."
When Gorbachev came to power in '85, no politician or bureaucrat was exempt from this under-the-table trafficking. The underground economy, which in the 60's was equivalent to 3% of the national economy, in the 90's in the Soviet Union reached 13%. Prostitution and drugs also contributed to a large part of the Soviet underground economy. It was in this illegality that corruption and the Mafias found very fertile ground. Already in 1974, among the highest Party officials, the Moscow Mafia had profitable business relations.
With the fierce privatizations in the early 90's the Russian Mafia found a real treasure; that was the period when organized crime became the true master of the streets, the dispenser of death and violence for millions of Russians who fell into the Abìss of drug addiction. . And unlike his predecessors who at least tried to hide things, Gorbachev instilled the idea of a lost war; he was the first to say in his speeches that capitalism won, and communism didn't. Attitude of a true leader. Many blamed the Soviet nomenklatura and bureaucracy who enjoyed special privileges and lived as if they were a class of their own.
State inertia, excessive bureaucratization and the indifference of Party members had created a huge gap between citizens and politics. The politicians themselves were so old that they were referred to as a "gerontocracy," a government of elders bloated by nepotism and cronyism. And clearly when the old guys are in power, all gathered into one party, they only care about keeping that power until they die.
What about improving the economy? Pff who damn cares? In the Soviet Union there were two nomenklatures: the political-administrative one, which permeated the single Party in Moscow, and the economic one made up of military, intellectuals and business managers. That the two sides were separated was not a good thing. Because when the central state - hence the bureaucrats in Moscow - increasingly weakened by the scarcity of money and consumer goods began to lose relevance and influence in the country, the power passed more and more into the hands of the economic nomenklatura, that is those who actually held the real resources of the country: directors who managed industries, estates and mines, the same ones who later, with the fierce sell-off of the best national companies, would turn into multi-billionaire oligarchs. In the liberal years of Gorbachev, the "economic nomenklatura" chose to play with intelligence, opening private companies and joint ventures with Western partners, by giving them valuable information previously kept by party bureaucrats.
And that wasn’t all: they also offered most of their resources that the Soviet Union enjoyed in abundance, such as oil and gas. Everything officially started with the famous Perestrojka, literally "the reconstruction". Perestroika proved one thing: that the breakup of the USSR, before Gorbachev, was not a foregone conclusion. Gorbachev - who is still alive and is 90 years old - has yet to be fully analysed by historians. For the moment I will always remember him for his awkward commercial [...] Essentially with that appearance which was paid 1 million dollars, Gorby implicitly admitted in front of everyone that consumerism was superior to the ideology of its own party.
The funny thing was that Gorbachev always invoked Lenin's name in his rallies, he considered him a mentor, but perestroika, initially presented as something revolutionary, ended up becoming the opposite, the dismantling of the whole system. The slogan was "acceleration", recovering the gap with the West. But in order to do so, Gorbachev implemented his reforms on the basis of two conditions that would have got Lenin's hair fall - at least the remaining ones: de-statalization, i'm not sure if this word exists in English, and privatization. According to some historians, Gorbachev acted consciously, he wanted to dismantle the Soviet system piece by piece, to embrace the dogmas of economic liberalism, deceived by the benefits of economic exchange with the West. For others, Gorbachev was simply an idiot who had no idea how to lead a country.
He instead admitted that he was convinced that it wasn’t possible to reform the country without first dismantling it, making it transparent and free from the maniacal control of state censorship, hence the concept of Glasnost'. Glasnost was in fact the sounding board of the disaster of perestroika, because the media began to talk about those problems in Russia that were under the eyes of all but no one could mention: alcoholism, lack of food and crumbling housing. And speaking of alcohol: the drinking habit of Russians is well known, to the point of being a social plague.
Gorbachev thought it was time to eradicate the problem by implementing an anti-alcohol policy. The catch was, however, that alcohol taxes guaranteed the state a sum of about six hundred and sixty-six million dollars. However, the Gosplan, the State Planning Committee - under pressure from Gorbachev himself - cut off that source of revenue, raising drink prices and prosecuting those caught in a... well, miserable state. Nonetheless, the ban didn't take into account a detail: the black market.
The vodka that became a luxury good ended up again "m3rachiulusly" resold through the back door. The financial disaster was quick to come: sales of vodka dropped from 54 billion rubles in 1984 to 11 billion in 1986. In Gorbachev's mind, however, there were no issues: this is it, in 5 years we'll heal USSR. Gorbachev reasoned by taking as a model what happened in the 30s: at that time, the USSR had begun to modernize thanks to the construction of industries and plants erected by Western companies that, on commission, had also trained Soviet engineers and workers from scratch. One example above all was the American architect Albert Kahn, who joined the Kremlin's consulting team for the construction of more than five hundred industrial plants; another example was the General Electric, which oversaw the construction of the hydroelectric power plant on the Dniepr River.
Instead, Gorbachev's mistake was to channel money into existing state enterprises, not to create new ones. The old leaders were conservative, unwilling to innovate. And that's why much of the equipment that had been purchased in the West was never used in the old plants.
Brilliant. Anyway, whatever plans Gorbachev and his team of economists had for the long term... well, the Chernobyl nuclear disaster in April 86 erased them altogether. The flight of hundreds of thousands of people from the surrounding areas evoked scenarios from World War II. According to the head of the economic department Nikolai Ryzhkov, the cost of the Chernobyl disaster for the first month alone was 8 billion rubles. To paraphrase Ryzhkov, Chernobyl delivered a devastating blow to the Soviet economy.
People began to whisper that it was the " tainted leader", Gorbachev, to bring bad luck... he was called in that disdainful way because of the visible spot on his forehead. Gorbachev did not make himself very popular, as he kept the entire Russian population in the dark about the disaster for many days. Apart from Chernobyl, Gorbachev went on with his Perestroika, and what were the results? Terrible. Perestroika liberalized overnight a Soviet economy that was planned from the beginning, it was a devastating blow.
First, government officials approved the creation of "free" prices, no longer controlled and set by the state. Only 4% of the citizens approved this maneuver. The result? A race to the top of basic necessities and a hyperinflation that in 1992 would have touched peaks of Two Thousand Six Hundred %. Money was rationed and in its place a sort of "consumer card" was introduced, they were sheets of paper worth various amounts of rubles, with which citizens could make purchases without using cash money. When they found a piece of bread after hours standing in line, Russians could count themselves lucky if they could buy a half-pound loaf of bread for 6 dollars, compared to an average monthly salary of fifty dollars. Although the Soviet standard of living until then had always been at least a third lower than that of Westerners, citizens noticed the difference with respect to previous times: crime, especially the mafia, was lower and there was a general sense of greater security.
Whether this was real or not is another story. With Perestroika there was a free-for-all for those who wanted to do business with large foreign multinationals, an incentive from which stemmed a whole series of speculation and fake sales, like the ones of the strategic Soviet mining companies at symbolic prices. On top of that, there was the Issuance of new currencies for all the republics of the Union. This increased the confusion of internal transactions and trade. In addition, the so-called "property law" of 1990, which removed the state from ownership of key industries, generated 2 million unemployed nationwide, a figure never seen before.
And as we know, an unemployed population use more and more alcohol and drugs, to say the least. By 98, the Russian economy, in the hands of mobsters and foreign entrepreneurs, would have been almost completely halved from 1990 figures, going from a GDP of five hundred and ten billion to a GDP of two hundred and seventy. Food prices had doubled, and wages were less than half. While, typhoid, cholera and other diseases had reached epidemic proportions in the country. It was as if the entire nation had suddenly gone back 80 years.
Some, such as historian Stephen Cohen, have called this achievement the result of a particular phenomenon, Gangster Capitalism. The opening up to international markets also encouraged the arrival of private banks, which replaced the monopoly of the State Bank. Soviet debt to Western banks jumped from twenty seven point two billion dollars in 1985 to forty billion $ in 1986. Wanting to reform things too quickly also invested the political front. Gorbachev knew that the Party - and its members - were the operational core. If he wanted to change the Union structure, the only way was to strip Party members of their various Departments and deprive them of their powers.
With a series of reforms Gorbachev did just that, he took away the Party's decision-making monopoly. In doing so, however, it was like beheading the State, it was a political suicide, in all respects. Without a head - the State - the body (the Soviet Union) suddenly stopped working, a bit like unplugging a device.
At that point, all it took was a little push, an international event of great impact that could maybe break up the entire Eastern bloc. Oh, yeah, how silly, this already happened in 1989: --- With the symbolic fall of the Berlin Wall, like a domino, all the Soviet republics, starting with the Baltic ones, broke away one after the other in the wake of the independence euphoria that horrified the Russian nationalists. And nationalism was the final card, the ace of spades that would close the game. The first to realize that the rules of that game were changing, was Boris Yeltsin. Like an old fox, Yeltsin exploited the frustrations of the most radical communists and some of the members of the secret service to break away from Gorbachev's wing, dress up as a populist leader, go into opposition, and support a coup against Gorbachev in 1991 in the capital Moscow. The images of him getting on the tank would go around the world, angering the most dissatisfied people who were fed up with Gorbachev's policies.
The coup failed immediately, because obviously there was no longer a state. It must be said that 70% of the population wanted to maintain the Soviet Union, the referendum on the preservation of the USSR in 1991 clearly demonstrated this. But these were not Yeltsin's plans.
Yeltsin had all the popular support to be able to obscure Gorbachev, take away his remaining consensus and force him to resign at the end of August. In November of the same year Yeltsin would issue a decree with which to make illegal any activity of the Communist Party and dissolve once and for all the Soviet State. On December 11, 1991 only two of the 15 Soviet republics were still part of the Union: Russia and Kazakhstan. The former left the Union the following day, on December 12. That was the end of the USSR and the beginning of the Russian Federation.
[gentlemen titanic]. It’s not over yet. With the exit of Russia, Kazakhstan became the Soviet Union.
Yep. For 4 days, until it declared itself an independent republic on December 16, 1991, Kazakhstan was basically the Soviet Union. Oh great Kazakhstan, thank you, you created a nightmare that even Lenin would never have dared to dream. I've been wanting to make this video for almost a year, I tried 3 times previously but I always gave up. Summarizing the reasons for the collapse of the Soviet Union in a 30 minutes video was unthinkable.
Yet here we are. Thanks to all of you for listening to me until the end. See you in the next episode.
Ciao!
2022-02-20 07:31
