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International History Term Paper 3
Matthias Chia
To what extent did economic problems in the Communist bloc bring about the end of the
Cold War?
The end of the cold war was marked by the symbolic fall of the Iron Curtain in November 1989, as well as the
declarations that it was over in December at Malta. While economic problems in the Communist bloc were compelling
reasons that brought about the end of the Cold War, it was the convergence of views by Gorbachev and Reagan on
increased cooperation and disarmament that underscored the end of the Cold War.
In some senses, we can see that the economic problems in the Communist bloc, a regional problem, as well as
improving relations between Gorbachev and Reagan, a global factor, had some responsibility in bringing about the end
of the Cold War. Economic stagnation and hardship in the Communist bloc led to creation of trade unions like
Solidarity in Poland which precipitated the desire for independence from the Soviet Union, giving rise to revolts and
strikes all across Eastern Europe. These economic problems caused political externalities, both within USSR and
regionally in the Communist bloc, giving rise to nationalism and the desire for independence. They also led to
Gorbachev and his planners and thinkers, a new generation of leaders who did not live through Stalin’s oppressive
regime, introducing the notion of “New Thinking”, in the hopes reforming the Soviet Union and redefining its role as a
superpower. This consisted of introducing Perestroika and Glasnost, which created openness towards redressing the
problems faced by the Communist bloc. These responses to the economic problems expedited the process that ended
the Cold War. On improving relations, it was the “extraordinary convergence” of Gorbachev and Reagan on the view
that international security is not gained through arms race, rather cooperation and security is the key to peace. This
changed the antithetical nature of their relationship, promoting greater cooperation through the 5 summits (Genenva,
Reykjavik, Moscow, Washington, Malta) leading up to 1989. Most notably, the signing of the 1987 Treaty on
Intermediate-range Nuclear Forces, “the first genuine disarmament treaty of the nuclear era”, is a sign of thawing
relations. As such, it is the synthesizing of these factors, rather than any individual factors, that culminated in the end of
the Cold War.
However, it can be argued that economic problems in the Communist bloc did more to bring about the end of
the Cold War. The running of the Soviet economy led to low productivity rates, the inability to compete with
Western capitalism and declining growth rates, from 6% in 1975 to 1.8% in 19851. Officials were often corrupt and
inefficient, accentuating the harshness of standards of living in the Soviet Union. To the Soviet hoi polloi, corruption
was growing alongside economic stagnation. Beyond the Soviet Union, economic stagnation and hardship led to intense
dissatisfaction amongst the populace of Eastern Europe. Between 1980 and 1986, real wages in Poland declined by
17% and in Hungary, by 15%. There was a desire for prosperity and a different form of economic system.
Additionally, the increased strain on the weak USSR economy, to support East European countries, due to the drop in
1
Douglas B. Reynolds , Dr (1995). Soviet Economic Decline. Retrieved August 27, 2009, Web site:
http://www.oilcrisis.com/reynolds/SovietDecline.htm
International History Term Paper 3
Matthias Chia
oil prices, from USD27 to less than USD102 in the 1980s, made it imperative for some form of action and reform to
take place.
These economic problems led to equally profound political implications as well, where the citizens of Eastern
Europe started doubting the legitimacy and mandate of their communist governments. As such, there was a desire for a
change in political structure that had led to these economic disasters.
In response to the different types of economic problems and their political impacts, Gorbachev and his new
age leaders, who wished to see an end to parochialism, nepotism, corruption and a ruling elite that appeared to be
distanced from the masses, decided to introduce Perestroika, restructuring and reforming the moribund economy. This
was primarily done to address the fundamental need to reform the organisation of the Communist Party of the Soviet
Union (CPSU). Additionally, glasnost was introduced, to encourage open and honest appraisal of the problems facing
the Soviet Union, including the Cold War confrontation.
The introduction of perestroika and glasnost in response to economic problems in the communist bloc led
to intense criticism, with the intention to test the tolerance of Gorbachev. Solidarity, a Polish trade union turned
political party, was extremely vocal in its criticisms of the communist government, even to the extent of going
on strikes. Similarly, in Hungary, the Democratic Confederation of Free Trade Unions (LIGA) criticised the
government heavily and even resorted to protests, in the spirit of glasnost. The fact that Poland had to impose
Marshall Law reinforces the potent nature of such uprisings. Yet, the reluctance of Gorbachev to intervene
despite persistent calls for support meant that the leaders in Eastern European countries lacked the will to
resist, leading to the capitulation of communist regimes in the communist bloc. Because of the lack of
resistance from Moscow, opposition to communist rule slowly became shaped and created by the people,
instead of parties themselves, as seen by the “popular uprisings” in Czechoslovakia.
These uprisings toppled communist regimes in Eastern Europe, culminating in the fall of the Iron
Curtain, one of the lasting causes of disagreement between USSR and USA. Such removal was of immense
symbolic and actual resonance. As such, economic problems in the Communist bloc provided a compelling
force of change, leading to economic and political reforms. This allowed revolutions to take place with little or
no resistance, which ultimately brought down the one of the lasting causes of the Cold War - the Iron Curtain.
Additionally, there was also the cost of being a super-power that was provided impetus for the end of
the Cold War. As a super-power, the Soviet Union has borne the monumentally expensive Cold War for 40
years, having to match US and project Soviet power. Costs include propping up communist regimes across the
globe, from Cuba (US$ 4 billion a year in aid and oil subsidies) to Afghanistan (approximately 175,000 troops
Hershey, Robert D. (December 30, 1989). Worrying Anew Over Oil Imports. Retrieved August 27, 2009, from
http://www.nytimes.com/1989/12/30/business/worrying-anew-over-oil-imports.html
2
International History Term Paper 3
Matthias Chia
and US$20 billion a year). There was a realisation that Perestroika would not work unless the East-West
relationship is changed, reducing the insecurity and allowing for diversion of resources to the domestic
economy. Thus, it played an integral part in shaping Moscow’s decision to end the Cold War.
However, while economic problems were compelling reasons to end the Cold War, it is naive to
suggest that it compelled Gorbachev to end the Cold War. The decline in growth rates of the Soviet economy
might have caused long term terminal decline, but was in no way an impending disaster. In addition, there was
little to suggest widespread dissent and organized opposition in Eastern Europe apart from Poland. Also, there
is little to suggest that the drain of the Eastern bloc on the Soviet economy was reaching a terminal or fatal
stage. Furthermore, in response to the increased protests and strikes, it was the reluctance of Gorbachev to
intervene that allowed for its escalation, thus its success was in part due to new directions from Moscow rather
than the force it created. Moreover, the cost of being a super-power did not hinder Moscow, as it was clear
that they could match the US, missile for missile all the way till 1987. Therefore, economic problems can only
be seen as a compelling factor that Gorbachev considered in ending the Cold War, rather than a factor that
compelled the end of the Cold War.
Furthermore, economic problems must be seen in relation to other problems, namely Gorbachev’s
realisation that the notion of “territory equates security” was obsolete, as well as his improved relations with
Reagan and commitment to anti-nuclearism.
With the ascension of Mikhail Gorbachev in 1985, there was a shift in focus of the two antithetical
political, economic and military ideologies. Both sides realised that a nuclear war was unwinnable, and that they
had a moral obligation to control or remove them.
Gorbachev and his new age leaders, like Edward Shevardnadze and Anatoly Chernyaev realised the
paramount importance of anti-nuclearism. This fact that they were not brought up in Stalin’s “revolution from
above” of the 1930s meant that there was change of focus in terms of international politics. Instead of
equating security with territory, they realised that “peace is the value above anything”.
The catastrophe at Chernobyl in 1986 caused them to realise that there was a moral imperative
independent of political calculations when it comes to the task of nuclear disarmament. In the words of
Shevardnadze, the tragedy “tore the blindfold from our eyes”. Unlike their predecessors, they saw the danger
of nuclear weapons and saw the need for a commitment to disarmament. This led to Gorbachev proposing to
Reagan, at Reykjavik in 1986, that all nuclear weapons should be scraped.
Reagan and a new generation of Western leaders like Margaret Thatcher and Francois Mitterand also
had antinuclear convictions that mirrored Gorbachev on the other side of the globe. Reagan had “a deep
International History Term Paper 3
Matthias Chia
antipathy for nuclear weapons” and “viewed their abolition to be a realistic and desirable goal”. They help to
discard his Cold War fears of the West, since both sides are no longer antithetical on one of the biggest issue in
the Cold War. This “extraordinary convergence” between Reagan and Gorbachev on the recognition of
nuclear threat and commitment to disarmament meant that there was a determination to get rid of the arms
race, a hugely important of the Cold War both politically and economically.
The mutual convictions were accentuated by the compatibility of personalities of the two leaders,
having “gone for a walk together and chatted by the fire”, leading to progressively better relations as seen by
concrete outcomes by 1987 at the Washington Summit, where the Intermediate-Range Nuclear Forces Treaty
(INF) was signed. Their relations continued to improve so well that by 1989, the condition of relations
between the US and USSR could hardly be described as “cold”, thus removing one of the conditions of the
Cold War.
Therefore, we can see that the extraordinary convergence of the two leaders led to the thawing of
relations and increase cooperation, culminating in the declarations in 1989 at Malta Conference. This
cooperation removed the condition of Cold War, where there is no longer denial of each other’s legitimacy or
competing military or economic systems.
The Reagan Victory School would argue that it was not Reagan’s second term accommodation but his
first term military assertiveness, through an increased in military spending (7% increase between 1981-1985),
brought about the end of the Cold War. Central to their legitimacy is the claim that the USSR was forced to
introduce perestroika and glasnost, setting off a chain reaction that ended in the tearing down of the Iron Curtain.
Also, they believe the USSR was forced to withdraw from Afghanistan and ultimately “giving up” the Cold
War because Reagan showed them that they are unable to match the US, in terms of military might and
economic aid.
However, it is naive to believe that Reagan’s role was so simplistic in ending such a complex conflict,
nor is it believable that the USSR would cave in to such military threat. In fact, the initial Soviet response to
the build up of military weapons was to accelerate production of offensive weapons, both strategic and
conventional. Thus, Reagan’s first term assertiveness did little in pressuring USSR in ending the Cold War.
In conclusion, while economic problems gave rise to political implications that led to the symbolic
tearing down of the Iron Curtain, its role in the ending of the Cold War were limited. Arguably, it determined
the when and in what way the Cold War ended but there were little to suggest they were so pressing that
Gorbachev was forced to terminate the Cold War. In fact, had Gorbachev wanted, he could have sent in the
tanks to stop the protests that arose from economic problems and secure the position of the Iron Curtain. His
International History Term Paper 3
Matthias Chia
reluctance was what precipitated the fall of the Iron Curtain. In essence, he allowed for the Iron Curtain to fall
and with it, the political and economic division of Europe.
On the other hand, it was the convergence of Gorbachev and Reagan’s view that signified the end of
the Cold War. Their intention, to allow Eastern Europe to revolt, and willingness, to increase cooperation and
disarm the nuclear threat, erased the condition of the Cold War – that of antithetical ideologies and heightened
tensions.
The end of the Cold War was signified by two key indicators, the fall of the Iron Curtain and the
improved condition of relations between the two super-powers. Given that economic problems only factor in
the consideration of one of these two indicators, their role in ending the Cold War was, in many senses,
limited. Arguably, it was Gorbachev’s role that was the most important, having been quintessential to the
success of both these indicators.
Bibliography
1. Walker, Martin. The Cold War. Owl Books Henry Holt and Company, LLC, 1993. Print.
2. Deudney and Ikenberry, Who Won the Cold War?. Foreign Policy
3. Lynch, Allen (1998). Gorbachev's international outlook: Intellectual Origins and Political Consequences